1) Sorrow 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 November, the kennel budgeted
for 2,300 tenant-days, but its actual level of activity was 2,350 tenant-days. The kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for November:
Data used in budgeting:
Actual results for November:
The activity variance for administrative expenses in November would be closest to:
A.$20 U
B.$310 F
C.$310 U
D.$20 F
2) A company needs an increase in working capital of $20,000 in a project that will last
4 years. The company’s tax rate is 30% and its after-tax discount rate is 10%. The
present value of the release of the working capital at the end of the project is closest to:
A.$6,000
B.$13,660
C.$9,562
D.$14,000
3) Smay Corporation has provided the following data:
The accounts receivable turnover for this year is closest to:
A.1.01
B.0.99
C.6.08
D.6.11
4) Sikorski Corporation has two service departments, Administrative and Facilities, and
two operating departments, Assembly and Customer Solutions.
The company uses the direct method to allocate service department costs to operating
departments. Administrative costs are allocated on the basis of employee hours and
Facilities costs are allocated on the basis of space occupied.
The total amount of Administrative Department cost allocated to the Assembly
Department is closest to:
A.$22,598
B.$22,838
C.$24,360
D.$24,039
5) Ricric Corporation has provided the following data for one of its products:
The manufacturing cycle efficiency for this operation is closest to:
A.0.375
B.0.45
C.0.18
D.0.33
6) Criblez Corporation has two divisions: Blue Division and Gold Division. The
following report is for the most recent operating period:
The company’s overall break-even sales is closest to:
A.$104,825
B.$383,825
C.$279,000
D.$299,645
7) Triste Corporation manufactures and sells women’s skirts. Each skirt (unit) requires
2.6 yards of cloth. Selected data from Triste’s master budget for next quarter are shown
below:
Each unit requires 1.6 hours of direct labor, and the average hourly cost of Triste’s
direct labor is $15. What is the cost of Triste Corporation’s direct labor in September?
A.$336,000
B.$240,000
C.$150,000
D.$210,000
8) Degregorio Corporation makes a product that uses a material with the following
direct material standards:
The company produced 5,600 units in November using 21,750 kilos of the material.
During the month, the company purchased 24,800 kilos of the direct material at a total
cost of $168,640. The direct materials purchases variance is computed when the
materials are purchased.
The materials price variance for November is:
A.$4,256 F
B.$4,256 U
C.$4,960 F
D.$4,960 U
9) Rank the projects according to the profitability index, from most profitable to least
profitable.
A.B, D, C
B.C, B, D
C.D, C, B
D.D, B, C
10) The break-even in units sold will decrease if there is an increase in:
A.unit sales volume.
B.total fixed expenses.
C.unit variable expenses.
D.selling price.
11) Consider the following production and cost data for two products, Q and P:
A total of 24,000 machine minutes are available each period and there is unlimited
demand for each product. What is the largest possible total contribution margin that can
be realized each period?
A) $120,000
B) $144,000
C) $456,000
D) $132,000
12) If operating income is $60,000, average operating assets are $240,000, and the
minimum required rate of return is 20%, what is the residual income?
A.40%
B.25%
C.$12,000
D.$48,000
13) Vette Tie Corporation has developed the following manufacturing overhead
standards to use in applying overhead to the production of its hand-painted silk ties.
Manufacturing overhead at Vette is applied to production on the basis of standard direct
labor-hours (DLHs).
The above standards were based on an expected annual volume of 60,000 ties. The
actual results for last year were as follows:
What was Vette’s variable overhead rate variance?
A.$2,800 Unfavorable
B.$13,200 Favorable
C.$16,000 Favorable
D.$68,000 Unfavorable
14) Consider the following production and cost data for two products, L and C:
The company can only perform 65,000 machine set-ups each period due to limited
skilled labor and there is unlimited demand for each product. What is the largest
possible total contribution margin that can be realized each period?
A.$845,000
B.$975,000
C.$910,000
D.$1,820,000