1) seyal inc.’s contribution margin ratio is 55% and its fixed monthly expenses are
$34,000. assuming that the fixed monthly expenses do not change, what is the best
estimate of the company’s net operating income in a month when sales are $94,000?
a.$17,700
b.$60,000
c.$8,300
d.$51,700
2) a lawnmower manufacturer computed a cost per unit of $53 by adding together last
month’s direct labor, direct materials, and manufacturing overhead and dividing that
total by the 10,000 units produced last month. (there were no beginning or ending
inventories.) if 9,000 units are going to be manufactured this month, we would expect
that the:
a.cost per unit will remain the same
b.cost per unit will decrease
c.direction of change in unit costs cannot be determined
d.cost per unit will increase
3) dilom farm supply is located in a small town in the rural west. data regarding the
store’s operations follow:
sales are budgeted at $260,000 for november, $230,000 for december, and $210,000 for
january.
collections are expected to be 55% in the month of sale, 40% in the month following
the sale, and 5% uncollectible.
the cost of goods sold is 80% of sales.
the company purchases 50% of its merchandise in the month prior to the month of sale
and 50% in the month of sale. payment for merchandise is made in the month following
the purchase.
other monthly expenses to be paid in cash are $21,700.
monthly depreciation is $17,000.
ignore taxes.
accounts payable at the end of december would be:
a.$84,000
b.$92,000
c.$184,000
d.$176,000
4) salling corporation bases its budgets on machine-hours. the company’s static
planning budget for may appears below:
the spending variance for power costs in the flexible budget performance report for the
month should be:
a.$310 u
b.$310 f
c.$820 u
d.$820 f
5) data concerning damberger corporation’s single product appear below:
the company is currently selling 5,000 units per month. fixed expenses are $243,000 per
month. the marketing manager believes that an $11,000 increase in the monthly
advertising budget would result in a 180 unit increase in monthly sales. what should be
the overall effect on the company’s monthly net operating income of this change?
a.increase of $200
b.decrease of $200
c.increase of $10,800
d.decrease of $11,000
6) mardist corporation has sales of $100,000, variable expenses of $75,000, fixed
expenses of $30,000, and a net loss of $5,000. how much would mardist have to sell to
achieve a profit of 10% of sales?
a.$187,500
b.$200,000
c.$225,500
d.$180,000
7) an increase in the accumulated depreciation account of $50,000 over the course of a
year would be shown on the company’s statement of cash flows prepared under the
indirect method as:
a.an addition to net income of $50,000 in order to arrive at net cash provided by
operating activities
b.a deduction from net income of $50,000 in order to arrive at net cash provided by
operating activities
c.an addition of $50,000 under investing activities
d.a deduction of $50,000 under investing activities
8) van cleef company’s comparative balance sheet and income statement for last year
appear below:
the company declared and paid $18,000 in cash dividends during the year. the company
uses the direct method to determine the net cash provided by operating activities.
on the statement of cash flows, the cost of goods sold adjusted to a cash basis would be:
a.$429,000
b.$360,000
c.$410,000
d.$460,000
9) pauls corporation uses the following activity rates from its activity-based costing to
assign overhead costs to products:
data concerning two products appear below:
how much overhead cost would be assigned to product x60r using the activity-based
costing system?
a.$5,523.58
b.$87,070.14
c.$115.02
d.$7,212.38
10) roofe inc. has provided the following data for the month of october. 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 underapplied by $2,000.
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 journal entry to record the allocation of any underapplied or overapplied overhead
for october would include the following:
a.credit to finished goods of $260
b.credit to finished goods of $35,950
c.debit to finished goods of $260
d.debit to finished goods of $35,950
11) the following inventory balances relate to lequin manufacturing corporation at the
beginning and end of the year:
lequin’s total manufacturing cost was $543,000. what was lequin’s cost of goods sold?
a.$517,000
b.$545,000
c.$569,000
d.$567,000
12) a labor efficiency variance resulting from the use of poor quality materials should
be charged to:
a.the production manager
b.the purchasing agent
c.manufacturing overhead
d.the engineering department
13) which of the following is not one of the five steps in the lean thinking model
discussed in the text?
a.create a pull system that responds to customer orders
b.automate the business process
c.identify the business process that delivers value
d.organize work arrangements around the flow of the business process
14) data from gofman corporation’s most recent balance sheet appear below:
sales on account in year 2 amounted to $1,300 and the cost of goods sold was $900.
the average collection period for year 2 is closest to:
a.0.9 days
b.39.3 days
c.36.5 days
d.1.2 days
15) on april 1, bachler corporation had $37,000 of raw materials on hand. during the
month, the company purchased an additional $75,000 of raw materials. during april,
$88,000 of raw materials were requisitioned from the storeroom for use in production.
these raw materials included both direct and indirect materials. the indirect materials
totaled $6,000.
the journal entry to record the purchase of raw materials would include a:
a.credit to raw materials of $112,000
b.credit to raw materials of $75,000
c.debit to raw materials of $75,000
d.debit to raw materials of $112,000
16) spiro corporation’s comparative balance sheet appears below:
the company’s net income (loss) for the year was $7,000 and its cash dividends were
$2,000. the total dollar amount of all of the items that would be classified as uses when
compiling a simplified statement of cash flows is:
a.$43,000
b.$45,000
c.$48,000
d.$3,000
17) davie corporation is preparing its manufacturing overhead budget for the fourth
quarter of the year. the budgeted variable factory overhead rate is $6.00 per direct
labor-hour; the budgeted fixed factory overhead is $92,000 per month, of which
$16,000 is factory depreciation.
the company recomputes its predetermined overhead rate every month. the
predetermined overhead rate for december should be:
a.$14.50
b.$12.20
c.$16.00
d.$1.50
18) krepps corporation uses the weighted-average method in its process costing system.
data concerning the first processing department for the most recent month are listed
below:
note: your answers may differ from those offered below due to rounding error. in all
cases, select the answer that is the closest to the answer you computed. to reduce
rounding error, carry out all computations to at least three decimal places.
the cost of ending work in process inventory in the first processing department
according to the company’s cost system is closest to:
a.$29,402
b.$24,502
c.$49,003
d.$25,895
19) becky works on the assembly line of a manufacturing company where she installs a
component part for one of the company’s products. she is paid $16 per hour for regular
time and time and a half for all work in excess of 40 hours per week.
becky’s employer offers fringe benefits that cost the company $3 for each hour of
employee time (both regular and overtime). during a given week, becky works 42 hours
but is idle for 3 hours due to material shortages. the company treats all fringe benefits as
part of manufacturing overhead. the allocation of becky’s wages and fringe benefits for
the week between direct labor cost and manufacturing overhead would be:
a.choice a
b.choice b
c.choice c
d.choice d