1) Groeneweg Corporation has provided the following data:
Dividends on common stock during Year 2 totaled $4,500. The market price of common
stock at the end of Year 2 was $9.45 per share. The company’s dividend payout ratio for
Year 2 is closest to:
A.8.7%
B.13.4%
C.4.5%
D.1.0%
2) The net present value of the entire project is closest to:
A.$403,202
B.$282,160
C.$163,202
D.$286,000
Depreciation expense = (Original cost – Salvage value) / Useful life
= ($240,000 – $0) / 4 years = $60,000 per year
Skolfield Corporation is considering a capital budgeting project that would require
investing $280,000 in equipment with an expected life of 4 years and zero salvage
value. Annual incremental sales would be $590,000 and annual incremental cash
operating expenses would be $470,000. The project would also require an immediate
investment in working capital of $20,000 which would be released for use elsewhere at
the end of the project. The project would also require a one-time renovation cost of
$30,000 in year 3. The company’s income tax rate is 30% and its after-tax discount rate
is 15%. The company uses straight-line depreciation. Assume cash flows occur at the
end of the year except for the initial investments. The company takes income taxes into
account in its capital budgeting.
3) The following data for February has been provided by Gillard Corporation.
The budget variance for February is:
A.$7,440 F
B.$7,440 U
C.$1,140 F
D.$1,140 U
4) During the year just ended, the retailer James Corporation purchased $425,000 of
inventory. The inventory balance at the beginning of the year was $175,000. If the cost
of goods sold for the year was $450,000, then the inventory turnover for the year was:
A.2.77
B.2.57
C.3.00
D.2.62
5) Sapien Corporation has provided the following data for the most recent year:
The company’s gross margin percentage is closest to:
A.52.3%
B.1691.2%
C.5.9%
D.34.3%
6) The Dillon Corporation makes and sells a single product. Overhead costs are applied
on the basis of standard direct labor-hours. The standard cost card shows that 5 direct
labor-hours are required per unit. The Dillon Corporation had the following budgeted
and actual data for March:
The fixed manufacturing overhead volume variance for March is:
A.$7,750 F
B.$7,750 U
C.$1,550 F
D.$3,900 U
7) What would be the total prevention cost appearing on the quality cost report?
A.$57,000
B.$77,000
C.$48,000
D.$86,000
8) The net present value of the entire project is closest to:
A.$201,500
B.$319,429
C.$206,110
D.$119,429
9) May Corporation, a merchandising firm, has budgeted sales as follows for the third
quarter of the year:
Cost of goods sold is equal to 65% of sales. The company wants to maintain a monthly
ending inventory equal to 130% of the Cost of Goods Sold for the following month.
The inventory on June 30 is less than this ideal since it is only $65,000. The company is
now preparing a Merchandise Purchases Budget.
The budgeted purchases for July are:
A.$52,000
B.$63,050
C.$47,450
D.$91,050
10) The following information concerning a proposed capital budgeting project has
been provided by Wick Corporation:
The expected life of the project is 4 years. The income tax rate is 35%. The after-tax
discount rate is 14%. The company uses straight-line depreciation on all equipment and
the annual depreciation expense would be $60,000. Assume cash flows occur at the end
of the year except for the initial investments. The company takes income taxes into
account in its capital budgeting.
The net present value of the project is closest to:
A.$101,282
B.$224,850
C.$119,042
D.$266,500
11) Parsons Corporation plans to sell 18,000 units during August. If the company has
5,500 units on hand at the start of the month, and plans to have 6,000 units on hand at
the end of the month, how many units must be produced during the month?
A.24,000
B.18,500
C.19,500
D.17,500