1) the predetermined overhead rate (variable and fixed) is $7.50 per machine-hour and
the denominator activity level is 135,000 machine-hours. if the variable portion of the
predetermined overhead rate is $3.00 per machine-hour, then the budgeted fixed factory
overhead for the year is:
a.$30,000
b.$607,500
c.$405,000
d.$1,012,500
2) harstin corporation has provided the following data:
the minimum required rate of return for the past year was:
a.36%
b.8%
c.12%
d.40%
3) rodenberger corporation keeps careful track of the time required to fill orders. the
times recorded for a particular order appear below:
the delivery cycle time was:
a.30.8 hours
b.8.8 hours
c.31.9 hours
d.2.7 hours
4) the following data concern two products sold by redding corporation.
if fixed expenses for the company as a whole are $120,000, the break-even point would
be:
a.$200,000
b.$218,182
c.$300,000
d.$266,667
5) hayase corporation processes sugar beets that it purchases from farmers. sugar beets
are processed in batches. a batch of sugar beets costs $35 to buy from farmers and $14
to crush in the company’s plant. two intermediate products, beet fiber and beet juice,
emerge from the crushing process. the beet fiber can be sold as is for $27 or processed
further for $11 to make the end product industrial fiber that is sold for $40. the beet
juice can be sold as is for $36 or processed further for $21 to make the end product
refined sugar that is sold for $46.
which of the intermediate products should be processed further?
a.beet fiber should not be processed into industrial fiber; beet juice should not be
processed into refined sugar
b.beet fiber should be processed into industrial fiber; beet juice should be processed
into refined sugar
c.beet fiber should be processed into industrial fiber; beet juice should not be processed
into refined sugar
d.beet fiber should not be processed into industrial fiber; beet juice should be processed
into refined sugar
6) swader kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. during march, the kennel budgeted for
2,900 tenant-days, but its actual level of activity was 2,930 tenant-days. the kennel has
provided the following data concerning the formulas used in its budgeting and its actual
results for march:
the facility expenses in the flexible budget for march would be closest to:
a.$20,700
b.$20,369
c.$20,793
d.$20,820
7) the tolar company has 400 obsolete desk calculators that are carried in inventory at a
total cost of $26,800. if these calculators are upgraded at a total cost of $10,000, they
can be sold for a total of $30,000. as an alternative, the calculators can be sold in their
present condition for $11,200.
the sunk cost in this situation is:
a.$10,000
b.$26,800
c.$11,200
d.$0
8) camden inc. produces and sells two products. during the most recent month, product
m21b’s sales were $35,000 and its variable expenses were $14,350. product y79x’s sales
were $20,000 and its variable expenses were $7,650. the company’s fixed expenses
were $30,820.
required:
a. determine the overall break-even point for the company. show your work!
b. if the sales mix shifts toward product m21b with no change in total sales, what will
happen to the break-even point for the company? explain.
9) faxon company, which has only one product, has provided the following data
concerning its most recent month of operations:
what is the unit product cost for the month under variable costing?
a.$122
b.$108
c.$99
d.$131
10) poulsen corporation manufactures and sells a single product. the company uses
units as the measure of activity in its budgets and performance reports. during july, the
company budgeted for 7,300 units, but its actual level of activity was 7,270 units. the
company has provided the following data concerning the formulas to be used in its
budgeting:
the manufacturing overhead in the flexible budget for july would be closest to:
a.$47,190
b.$47,151
c.$45,344
d.$45,719
11) raymond company estimates that an investment of $800,000 would be necessary to
produce and sell 40,000 units of product s each year. costs associated with the new
product would be:
the company requires a 20% return on the investment in all products. the company used
the absorption costing approach to cost-plus pricing as described in the text.
the markup percentage needed on product s in order to achieve the company’s required
return on investment would be:
a.29%
b.40%
c.50%
d.37%
12) mcbee products inc. makes two productsc38s and v81z. product c38s’s selling price
is $91.00 and its unit variable cost is $72.80. product v81z’s selling price is $200.00 and
its unit variable cost is $180.00. the monthly demand is 890 units for product c38s and
680 units for v81z. the constrained resource is a particular machine that is available for
10,000 minutes each month. each unit of product c38s requires 7 minutes on this
machine and each unit of product v81z requires 10 minutes on this machine.
how many units of product j35v should be produced each month?
a.240
b.0
c.957
d.510
13) bullins corporation has a standard cost system in which it applies manufacturing
overhead to products on the basis of standard machine-hours (mhs). the company has
provided the following data for the most recent month:
what was the fixed manufacturing overhead budget variance for the month?
a.$4,000 unfavorable
b.$1,440 favorable
c.$1,440 unfavorable
d.$4,000 favorable
14) moorhouse clinic uses client-visits as its measure of activity. during december, the
clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,690
client-visits. the clinic has provided the following data concerning the formulas used in
its budgeting and its actual results for december:
the activity variance for personnel expenses in december would be closest to:
a.$2,361 u
b.$71 u
c.$71 f
d.$2,361 f
15) part n19 is used by malouf corporation to make one of its products. a total of 7,000
units of this part are produced and used every year. the company’s accounting
department reports the following costs of producing the part at this level of activity:
an outside supplier has offered to make the part and sell it to the company for $24.50
each. if this offer is accepted, the supervisor’s salary and all of the variable costs,
including the direct labor, can be avoided. the special equipment used to make the part
was purchased many years ago and has no salvage value or other use. the allocated
general overhead represents fixed costs of the entire company, none of which would be
avoided if the part were purchased instead of produced internally. in addition, the space
used to make part n19 could be used to make more of one of the company’s other
products, generating an additional segment margin of $25,000 per year for that product.
what would be the impact on the company’s overall net operating income of buying part
n19 from the outside supplier?
a.net operating income would decline by $21,900 per year
b.net operating income would decline by $60,700 per year
c.net operating income would decline by $10,700 per year
d.net operating income would increase by $25,000 per year
16) gowin inc. has provided the following data for the month of september. there were
no beginning inventories; consequently, the direct materials, direct labor, and
manufacturing overhead applied listed below are all for the current month.
manufacturing overhead for the month was overapplied by $13,000.
the company allocates any underapplied or overapplied overhead among work in
process, finished goods, and cost of goods sold at the end of the month on the basis of
the overhead applied during the month in those accounts.
the finished goods inventory at the end of september after allocation of any
underapplied or overapplied overhead for the month is closest to:
a.$34,859
b.$34,860
c.$37,981
d.$37,980
17) (ignore income taxes in this problem.) steinmann inc. is considering the acquisition
of a new machine that costs $410,000 and has a useful life of 5 years with no salvage
value. the incremental net operating income and incremental net cash flows that would
be produced by the machine are:
the payback period of this investment is closest to:
a.2.9 years
b.3.2 years
c.4.8 years
d.5.0 years
18) rippelmeyer kennel uses tenant-days as its measure of activity; an animal housed in
the kennel for one day is counted as one tenant-day. during june, the kennel budgeted
for 3,600 tenant-days, but its actual level of activity was 3,550 tenant-days. the kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for june:
the spending variance for expendables in june would be closest to:
a.$130 f
b.$600 u
c.$130 u
d.$600 f