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1) Falmouth Corporation's debt to equity ratio is 0.6. Current liabilities are $120,000,
long term liabilities are $360,000, and working capital is $140,000. Total assets of the
corporation must be:
A.$600,000
B.$1,200,000
C.$800,000
D.$1,280,000
2) The following accounts are from last year's books of Sharp Manufacturing:
Sharp uses job-order costing and applies manufacturing overhead to jobs based on
direct labor costs. What is the amount of direct materials used for the year?
A.$93,000
B.$69,000
C.$87,000
D.$82,000
3) Mcbrien Corporation uses the step-down method to allocate service department costs
to operating departments. The company has two service departments, Service
Department A and Service Department B, and two operating departments, Operating
Department X and Operating Department Y. Data concerning those departments follow:
Service Department A costs are allocated first on the basis of allocation base A and
Service Department B costs are allocated second on the basis of allocation base B.
In the first step of the allocation, the amount of Service Department A cost allocated to
the Operating Department X is closest to:
A.$17,600
B.$13,235
C.$15,804
D.$18,438
4) Rhett Corporation manufactures and sells dress shirts. Each shirt (unit) requires 3
yards of cloth. Selected data from Rhett's master budget for next quarter are shown
below:
How many yards of cloth should Rhett plan on purchasing in May?
A.84,700 yards
B.96,700 yards
C.98,100 yards
D.98,800 yards
5) Costabile Corporation is considering dropping product G41O. Data from the
company's accounting system appear below:
All fixed expenses of the company are fully allocated to products in the company's
accounting system. Further investigation has revealed that $117,000 of the fixed
manufacturing expenses and $46,000 of the fixed selling and administrative expenses
are avoidable if product G41O is discontinued.
Required:
a. According to the company's accounting system, what is the net operating income
earned by product G41O? Show your work!
b. What would be the effect on the company's overall net operating income of dropping
product G41O? Should the product be dropped? Show your work!
6) You have deposited $16,700 in a special account that has a guaranteed rate of return
of 11% per year. If you are willing to completely exhaust the account, what is the
maximum amount that you could withdraw at the end of each of the next 6 years?
Select the amount below that is closest to your answer.
A.$3,465
B.$3,089
C.$2,783
D.$3,947
7) Hoop Corporation has four different products that use the same constrained resource.
Data concerning those products appear below:
The company does not have enough of the constrained resource to satisfy for demand of
all four products. From the standpoint of the entire company, if it is a choice between
sales of one unit of one product versus another, which product should the salespersons
emphasize?
A.H100
B.H400
C.H300
D.H200
8) Compound K72R is used to make Munuz Corporation's major product. The standard
cost of compound K72R is $43.90 per ounce and the standard quantity is 1.4 ounces per
unit of output. In the most recent month, 120 ounces of the compound were used to
make 100 units of the output. When recording the use of materials in production, Raw
Materials would be:
A.debited for $5,268.
B.credited for $6,146.
C.credited for $5,268.
D.debited for $6,146.
9) Perla Kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. During March, the kennel budgeted for
2,200 tenant-days, but its actual level of activity was 2,160 tenant-days. The kennel has
provided the following data concerning the formulas used in its budgeting and its actual
results for March:
Data used in budgeting:
Actual results for March:
The spending variance for food and supplies in March would be closest to:
A.$152 F
B.$480 F
C.$480 U
D.$152 U
10) Rank the projects according to the profitability index, from most profitable to least
profitable.
A.F, E, D
B.D, F, E
C.F, D, E
D.E, F, D
11) Blackner Corporation produces and sells a single product. Data concerning that
product appear below:
The break-even in monthly dollar sales is closest to:
A.$723,800
B.$918,060
C.$1,538,020
D.$492,140
12) The company's equity multiplier at the end of Year 2 is closest to:
A.0.70
B.1.43
C.2.34
D.0.43
13) Using the high-low method of analysis, the estimated variable electrical cost per
machine hour is:
A) $0.65
B) $0.40
C) $0.70
D) $0.67
14) The contribution margin for December is:
A) $1,369,400
B) $2,421,500
C) $1,193,100
D) $929,100
15) Erastic Corporation has $14,000 in cash, $8,000 in marketable securities, $34,000
in account receivable, $40,000 in inventories, and $42,000 in current liabilities. The
corporation's current assets consist of cash, marketable securities, accounts receivable,
and inventory. The corporation's acid-test ratio is closest to:
A.1.33
B.0.81
C.2.29
D.1.14
16) On the statement of cash flows, the selling and administrative expense adjusted to a
cash basis would be:
A.$304,000
B.$384,000
C.$310,000
D.$236,000
