1) which of the following would be classified as an appraisal cost on a quality cost
report?
a.systems development
b.plant utilities in the inspection area
c.lost sales arising from a reputation for poor quality
d.audits of the effectiveness of the quality system
2) at a sales volume of 36,000 units, quale corporation’s sales commissions (a cost that
is variable with respect to sales volume) total $187,200.
to the nearest whole cent, what should be the average sales commission per unit at a
sales volume of 36,400 units? (assume that this sales volume is within the relevant
range.)
a.$5.20
b.$4.89
c.$5.17
d.$5.14
$187,200 36,000 = $5.20 per unit average cost
since sales commission is a variable cost, the average per unit cost is the same at any
volume level within the relevant range.
3) carver company produces a product which sells for $30. variable manufacturing costs
are $15 per unit. fixed manufacturing costs are $5 per unit based on the current level of
activity, and fixed selling and administrative costs are $4 per unit. a selling commission
of 10% of the selling price is paid on each unit sold. the contribution margin per unit is:
a.$3
b.$15
c.$8
d.$12
4) uzzle corporation uses a discount rate of 10% and has a tax rate of 30%. the
following cash flows occur in the last year of an 8-year equipment selection investment
project:
the assumed salvage value was zero when the depreciation deductions were computed
for tax purposes. the total after-tax present value of the cash flows above is closest to:
a.$12,189
b.$24,518
c.$26,199
d.$28,440
5) altona corporation’s vice president in charge of marketing believes that every 3%
increase in the selling price of one of the company’s products would lead to a 5%
decrease in the product’s total unit sales. the product’s absorption costing unit product
cost is $13.50. the variable production cost is $7.80 per unit and the variable selling and
administrative cost is $2.30 per unit.
the product’s profit-maximizing price according to the formula in the text is closest to:
a.$25.66
b.$25.21
c.$35.80
d.$60.44
6) lauter printing uses two measures of activity, press runs and book set-ups, in the cost
formulas in its budgets and performance reports. the cost formula for wages and salaries
is $5,300 per month plus $480 per press run plus $1,080 per book set-up. the company
expected its activity in october to be 169 press runs and 64 book set-ups, but the actual
activity was 167 press runs and 60 book set-ups. the actual cost for wages and salaries
in october was $155,690.
the spending variance for wages and salaries in october would be closest to:
a.$5,430 u
b.$150 u
c.$5,430 f
d.$150 f
7) part j88 is used in one of quinney corporation’s products. the company makes 3,000
units of this part each 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 produce this part and sell it to the company for $32.10
each. if this offer is accepted, the supervisor’s salary and all of the variable costs,
including 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. if the outside supplier’s offer
were accepted, only $3,000 of these allocated general overhead costs would be avoided.
if management decides to buy part j88 from the outside supplier rather than to continue
making the part, what would be the annual impact on the company’s overall net
operating income?
a.net operating income would decline by $22,200 per year
b.net operating income would decline by $16,200 per year
c.net operating income would decline by $5,400 per year
d.net operating income would decline by $19,200 per year
8) mah clinic uses client-visits as its measure of activity. during april, the clinic
budgeted for 3,800 client-visits, but its actual level of activity was 3,750 client-visits.
the clinic has provided the following data concerning the formulas to be used in its
budgeting:
the medical supplies in the flexible budget for april would be closest to:
a.$21,340
b.$22,600
c.$22,325
d.$21,913
9) litten corporation’s most recent income statement appears below:
the gross margin percentage is closest to:
a.92.0%
b.416.5%
c.24.0%
d.47.9%
10) hackney company, which has only one product, has provided the following data
concerning its most recent month of operations:
what is the total period cost for the month under the variable costing approach?
a.$42,300
b.$81,400
c.$114,300
d.$72,000
11) at a sales volume of 36,000 units, quale corporation’s sales commissions (a cost that
is variable with respect to sales volume) total $187,200.
to the nearest whole dollar, what should be the total sales commissions at a sales
volume of 38,300 units? (assume that this sales volume is within the relevant range.)
a.$199,160
b.$175,958
c.$193,180
d.$187,200
12) 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 medical supplies in the flexible budget for december would be closest to:
a.$18,150
b.$17,472
c.$17,378
d.$18,105
13) the sarbanes-oxley act of 2002 contains all of the following provisions except:
a.a cfo must be a cpa or cma
b.the audit committee of the board of directors of a company must hire, compensate,
and terminate the public accounting firm that audits the company’s financial reports
c.severe penalties are established for altering or destroying documents that may
eventually be used in an official proceeding
d.both the ceo and cfo must certify in writing that their company’s financial statements
and accompanying disclosures fairly represent the results of operations