1) Carson Corporation uses the FIFO method in its process costing system. The
Assembly Department started the month with 6,000 units in its beginning work in
process inventory that were 20% complete with respect to conversion costs. An
additional 74,000 units were transferred in from the prior department during the month
to begin processing in the Assembly Department. There were 8,000 units in the ending
work in process inventory of the Assembly Department that were 60% complete with
respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for the
month?
A.72,000
B.75,600
C.76,000
D.76,800
2) Arizaga Corporation manufactures canoes in two departments, Fabrication and
Waterproofing. In the Fabrication Department, fiberglass panels are attached to a canoe-
shaped aluminum frame. The canoes are then transferred to the Waterproofing
department to be coated with sealant. Arizaga uses a weighted-average process cost
system to collect costs in both departments.
All materials in the Fabrication Department are added at the beginning of the
production process. On July 1, the Fabrication Department had 320 canoes in process
that were 20% complete with respect to conversion cost. On July 31, Fabrication had
540 canoes in process that were 30% complete with respect to conversion cost. During
July, the Fabrication Department completed 6,700 canoes and transferred them to the
Waterproofing Department.
What are the Fabrication Department’s equivalent units related to conversion costs for
July?
A.6,542
B.6,798
C.6,862
D.7,078
3) Norton Inc. could improve its current ratio of 2 by:
A.paying a previously declared stock dividend.
B.writing off an uncollectible receivable.
C.selling merchandise on credit at a profit.
D.purchasing inventory on credit.
4) Wesolick Clinic uses client-visits as its measure of activity. During August, the clinic
budgeted for 2,900 client-visits, but its actual level of activity was 2,870 client-visits.
The clinic has provided the following data concerning the formulas used in its
budgeting and its actual results for August:
Data used in budgeting:
Actual results for August:
The activity variance for personnel expenses in August would be closest to:
A.$2,104 U
B.$384 U
C.$384 F
D.$2,104 F
5) Assume you can invest money at a 14% rate of return. How much money must be
invested now in order to be able to withdraw $5,000 from this investment at the end of
each year for 8 years, the first withdrawal occurring one year from now?
A.$24,840
B.$23,195
C.$21,440
D.$1,755
6) A tile manufacturer has supplied the following data:
What is the company’s unit contribution margin?
A.$0.23 per unit
B.$4.90 per unit
C.$3.10 per unit
D.$1.80 per unit
7) Cutterski Corporation manufactures a propeller. Shown below is Cutterski’s cost
structure:
In its first year of operations, Cutterski produced 60,000 propellers but only sold
54,000.
What would Cutterski report as its cost of goods sold under absorption costing?
A.$6,156,000
B.$6,885,000
C.$6,966,000
D.$8,208,000
8) In making the decision to buy the model 230 machine rather than the model 380
machine, the sunk cost was:
A) $305,000
B) $266,000
C) $278,000
D) $207,000
9) Beakins Corporation produces a single product. The standard cost card for the
product follows:
During a recent period the company produced 1,200 units of product. Various costs
associated with the production of these units are given below:
The company records all variances at the earliest possible point in time. Variable
manufacturing overhead costs are applied to products on the basis of standard direct
labor-hours.
The labor efficiency variance for the period is:
A.$3,000 U
B.$2,550 U
C.$2,550 F
D.$3,000 F
10) ( Galindo Long-Haul, Inc., is considering the purchase of a tractor-trailer that would
cost $178,848, would have a useful life of 8 years, and would have no salvage value.
The tractor-trailer would be used in the company’s hauling business, resulting in
additional net cash inflows of $36,000 per year. The internal rate of return on the
investment in the tractor-trailer is closest to:
A.10%
B.15%
C.12%
D.13%
11) Hammes Corporation manufactures and sells a single product. The company uses
units as the measure of activity in its budgets and performance reports. During
February, the company budgeted for 5,500 units, but its actual level of activity was
5,510 units. The company has provided the following data concerning the formulas to
be used in its budgeting:
The activity variance for direct labor in February would be closest to:
A.$1,742 F
B.$62 U
C.$62 F
D.$1,742 U