Mr. Lite is an entrepreneur that builds and manages organic vegetables in the United
States. Mr. Lite recently developed a sustainability strategy to build a large greenhouse
and warehouse in a recessed area in North Carolina. The greenhouse is expected to
produce organic vegetables and Mr. Lite can sell the organic vegetables to the state to
feed homeless people at the local community centers in the state. This project is
expected to generate a minimum of 100 full-time employees. The cost to build the new
greenhouse is $10,000,000 and the food that is produced at the greenhouse is expected
to generate $1,500,000 in payments from the state.
Compute the payback period, in years. Should Mr. Lite build the new greenhouse? Is
the strategy to build the new greenhouse an effective sustainability strategy? Why or
why not?
The balance sheet for Blineberry Corporation follows:
Operating income during the period was $18,000, while cash dividends paid were
$17,400. The total sources of cash at Blineberry Corporation during the year was
A) $40,950.
B) $8,200.
C) $48,050.
D) $12,050.
The Hummel Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s rate of return on net sales for the current year?
A) 0.32
B) 0.10
C) 0.04
D) 0.77
Johnson Trucking Company wants to determine a fuel surcharge to add to its customers’
bills based on the number of miles driven to each area. It wants to separate the fixed
and variable portion of the truck’s operating costs so it has a better idea of how distance
affects these costs. Johnson Trucking Company has the following data available.
Using the high-low method, the monthly operating costs if Johnson Trucking Company
drives 20,000 miles in a month will be
A) $28,650.
B) $10,500.
C) $25,500.
D) $15,000.
The Bedford Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $30,000 of the current year’s current assets.
Average inventory for the current year is $36,250.
Average net accounts receivable for the current year is $45,000.
There are 35,000 shares of common stock outstanding.
Total dividends paid during the current year were $17,000.
The market price per share of common stock is $20.
What is the price-earnings ratio for the current year?
A) 4.05
B) 0.25
C) 4.94
D) 5.12
The following data pertain to costs at Summit Company:
The fixed cost per unit is
A) $3.75.
B) $15.00.
C) $18.75.
D) $11.25.
Monroe Manufacturing produces and sells a product with a price of $100/unit. The
following data has been prepared for its estimated upper and lower levels of activity.
The fixed expenses for this company are
A) depreciation, office salaries, and advertising.
B) indirect materials, indirect labor, and depreciation.
C) direct materials, direct labor, and depreciation.
D) sales salaries, office salaries, and advertising.
The ________ “tells managers how much of the total direct materials variance is due to
using more or less materials than anticipated the by standards.”
A) production volume variance
B) overhead flexible budget variance
C) price variance
D) quantity variance
A company uses the indirect method to prepare the statement of cash flows. Which of
the following items would be subtracted from net income to determine the net cash flow
from operating activities on the statement of cash flows?
A) An increase in dividends payable would be subtracted from net income to determine
the net cash flow from operating activities in the statement of cash flows.
B) A loss on the sale of equipment would be subtracted from net income to determine
the net cash flow from operating activities in the statement of cash flows.
C) A gain on the sale of equipment would be subtracted from net income to determine
the net cash flow from operating activities in the statement of cash flows.
D) Depreciation expense would be subtracted from net income to determine the net
cash flow from operating activities in the statement of cash flows.
R-Cubed manufactures custom playground equipment from recycled plastics for city
school districts. The school districts are required to use a certain percentage of recycled
materials to comply with its state grants. As a result, R-Cubed tracks both virgin
(non-recycled) and recycled materials used to manufacture its playground equipment.
R-Cubed uses a predetermined manufacturing overhead rate of $7.00 per direct labor
hour.
Here is a summary of the materials and labor used on a recent job for Stow City
Schools:
Calculate the percentage of recycled-content used in the Stow City Schools job (using
pounds).
A) 65%
B) 35%
C) 186%
D) 54%
To evaluate the performance of a(an) ________, a top manager is responsible for
revenues, costs, and the efficient use of the assets invested in the division.
A) cost center
B) investment center
C) profit center
D) revenue center
The Hummel Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s rate of return on total assets for the current year?
A) 28%
B) 32%
C) 0.35%
D) 22.86%
The following information relates to Harris Corporation.
Required:
a.What is the acid-test ratio for the current year?
b.What is the inventory turnover for the current year?
c.What is days’ sales in receivables for the current year?
d.What is the book value per share of common stock for the current year?
e.What is the price-earnings ratio for the current year?
f.What is the rate of return on total assets for the current year?
g.What is the times-interest-earned ratio for the current year?
h.What is the current ratio for the current year?
Which of the following is a benefit to an organization that implements a budget?
A) Budgets help managers focus their attention on the future needs in an organization.
B) Budgets help managers improve their decision-making processes in an organization.
C) Budgets help the manager improve the motivation of employees in the workplace.
D) All of the above
To follow is information about the units produced and total manufacturing costs for
Pine Enterprises for the past six months.
Using the high-low method, what is the monthly fixed manufacturing cost?
A) $3,900
B) $14,650
C) $1,650
D) $4,250
Geneva Bottled Water Co. is assembling a weighted average contribution margin chart
to better analyze differences between sales on 36 oz. and the 20 oz. bottled water. The
sales price per unit of the 36 oz. bottled water is $3.79 while the sales price per unit of
the 20 oz. bottled water is $1.19. The contribution margin per unit for the 36 oz. bottle
is $1.35 and the contribution margin of the 20 oz. bottle is $0.28. The 20 oz. bottle
outsells the 36 oz. bottle by a 5:1 relationship.
What is the weighted average contribution margin per unit on these two products?
A) $2.75
B) $1.30
C) $0.46
D) $1.45
Jones Ice Cream Stand is operated by Mr. Jones and experiences different sales patterns
throughout the year. To plan for the future, Mr. Jones wants to determine its cost
behavior patterns. He has the following information available about the ice cream
stand’s operating costs and the number of soft serve cones served.
Using the high-low method, the fixed costs for a month are
A) $300.
B) $2,200.
C) $500.
D) $750.