1) Onorato Corporation has provided the following information concerning a capital
budgeting project:
The company uses straight-line depreciation on all equipment.
The total cash flow net of income taxes in year 2 is:
A.$133,000
B.$160,000
C.$90,000
D.$98,000
2) Calin Corporation has total current assets of $615,000, total current liabilities of
$230,000, total stockholders’ equity of $1,183,000, total net plant and equipment of
$958,000, total assets of $1,573,000, and total liabilities of $390,000. The company’s
working capital is:
A.$615,000
B.$1,183,000
C.$385,000
D.$958,000
3) The combined present value of the working capital needed at the beginning of the
project and the working capital released at the end of the project is closest to:
A.$16,872
B.$0
C.$(4,116)
D.$(13,111)
4) Denby Corporation applies manufacturing overhead to products on the basis of
standard machine-hours. Budgeted and actual fixed manufacturing overhead costs for
the most recent month appear below:
The company based its original budget on 6,400 machine-hours. The company actually
worked 6,710 machine-hours during the month. The standard hours allowed for the
actual output of the month totaled 6,540 machine-hours. What was the overall fixed
manufacturing overhead volume variance for the month?
A.$3,286 Favorable
B.$1,484 Unfavorable
C.$3,286 Unfavorable
D.$1,484 Favorable
5) Nicolaysen 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 5,700 units, but its actual level of activity was
5,690 units. The company has provided the following data concerning the formulas
used in its budgeting and its actual results for February:
Data used in budgeting:
Actual results for February:
The selling and administrative expenses in the planning budget for February would be
closest to:
A.$29,787
B.$28,507
C.$29,839
D.$28,510
6) The income tax expense in year 2 is:
A.$70,000
B.$7,000
C.$42,000
D.$49,000
7) The total cash flow net of income taxes in year 3 is:
A.$103,000
B.$33,000
C.$54,000
D.$60,000
8) Cashan Corporation makes and sells a product called a Miniwarp. One Miniwarp
requires 1.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps
for the next five months is as follows:
The company wants to maintain monthly ending inventories of Jurislon equal to 30% of
the following month’s production needs. On July 31, this requirement was not met since
only 10,400 kilograms of Jurislon were on hand. The cost of Jurislon is $4.00 per
kilogram. The company wants to prepare a Direct Materials Purchase Budget for the
next five months.
The total cost of Jurislon to be purchased in August is:
A.$149,860
B.$252,400
C.$191,460
D.$147,000
9) Larner Corporation uses the weighted-average method in its process costing system.
Operating data for the first processing department for the month of June appear below:
According to the company’s records, the conversion cost in beginning work in process
inventory was $68,064 at the beginning of June. Additional conversion costs of
$585,324 were incurred in the department during the month.
What was the cost per equivalent unit for conversion costs for the month? (Round off to
three decimal places.)
A.$6.892
B.$6.806
C.$5.575
D.$7.090
10) Which of the following would be added to net income in the operating activities
section of a statement of cash flows prepared using the indirect method?
A.a decrease in accounts receivable.
B.an increase in prepaid expenses.
C.an increase in accrued liabilities.
D.an increase in property, plant and equipment.
11) Sholette Manufacturing Corporation has a standard cost system in which it applies
manufacturing overhead to products on the basis of standard machine-hours (MHs) at
$5.00 per MH. During the month, the actual total variable manufacturing overhead was
$22,540 and the actual level of activity for the period was 4,600 MHs. What was the
variable overhead rate variance for the month?
A.$92 Favorable
B.$92 Unfavorable
C.$460 Unfavorable
D.$460 Favorable
12) The company’s price-earnings ratio for Year 2 is closest to:
A.0.76
B.10.64
C.16.52
D.7.73
13) Wall Corporation, which produces commercial safes, has provided the following
data:
Supplies cost is an element of variable manufacturing overhead.
The variable overhead rate variance for supplies is closest to:
A.$52,966 U
B.$49,870 F
C.$52,966 F
D.$49,870 U
14) ( The management of Cantell Corporation is considering a project that would
require an initial investment of $47,000. No other cash outflows would be required. The
present value of the cash inflows would be $55,930. The profitability index of the
project is closest to:
A.1.19
B.0.81
C.0.19
D.0.16