1) All other things the same, if long-term debt is exchanged for short-term debt, the
debt-to-equity ratio will be unchanged.
2) When a company sells used equipment for a loss, the net profit margin percentage is
unaffected.
3) In a factory operating at capacity, not every machine and person should be working
at the maximum possible rate.
4) Future costs that do not differ between the alternatives in a decision are avoidable
costs.
5) Because continuous improvement is very difficult, the emphasis in the balanced
scorecard tends to be on meeting preset standards.
6) Activity rates are computed in the second-stage allocation in activity-based costing.
7) One of the advantages of allocating common fixed costs to a product is that such
allocations more accurately reflect the product’s true profitability.
8) The cost of a completed job in a job-order costing system typically consists of the
actual direct materials cost of the job, the actual direct labor cost of the job, and the
manufacturing overhead cost applied to the job.
9) In describing the cost equation, Y = a + bX, “a” is:
A) the dependent variable cost.
B) the independent variable the level of activity.
C) the total fixed cost.
D) the variable cost per unit of activity.
10) Which of the following would be classified as an appraisal cost on a quality cost
report?
A.Supervision of testing and inspection activities.
B.Systems development.
C.Quality engineering.
D.Quality training.
11) 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 food and supplies in the flexible budget for March would be closest to:
A.$18,612
B.$18,745
C.$19,446
D.$18,940
12) The company’s dividend payout ratio is closest to:
A.1.3%
B.1.7%
C.17.1%
D.26.3%
13) Which of the following would be classified as a prevention cost on a quality cost
report?
A.Technical support provided to suppliers.
B.Rework labor and overhead.
C.Net cost of scrap.
D.Debugging software errors.
14) All of the following costs would be found in a companys accounting records except:
A) sunk cost.
B) opportunity cost.
C) indirect costs.
D) direct costs.
15) Steven Corporation uses the FIFO method in its process costing system.
Department A’s beginning work in process inventory consisted of 15,000 units, 100%
complete with respect to materials and 40% complete with respect to conversion costs.
The total cost of this inventory was $31,000. A total of 40,000 units were transferred
out during the month. The costs per equivalent unit were computed to be $1.30 for
materials and $2.20 for conversion costs. The cost of the units completed and
transferred out was:
A.$140,000
B.$138,300
C.$131,700
D.$118,500
16) The company’s dividend payout ratio is closest to:
A.1.3%
B.1.7%
C.17.1%
D.26.3%
17) Walkenhorst Corporation has two divisions: Bulb Division and Seed Division. The
following report is for the most recent operating period:
The common fixed expenses have been allocated to the divisions on the basis of sales.
Required:
a. What is the Bulb Division’s break-even in sales dollars?
b. What is the Seed Division’s break-even in sales dollars?
c. What is the company’s overall break-even in sales dollars?
18) If overhead was underapplied by $2,500 during May, the actual overhead cost for
the month must have been:
A.$16,700
B.$21,700
C.$18,500
D.$23,500
19) If the company bases its predetermined overhead rate on the estimated amount of
the allocation base for the upcoming year the amount of manufacturing overhead
charged to the Job B04D is closest to:
The management of Richbourg Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity. The company’s controller
has provided an example to illustrate how this new system would work. In this
example, the allocation base is machine-hours and the estimated amount of the
allocation base for the upcoming year is 63,000 machine-hours. In addition, capacity is
70,000 machine-hours and the actual level of activity for the year is 66,200
machine-hours. All of the manufacturing overhead is fixed and is $2,866,500 per year.
For simplicity, it is assumed that this is the estimated manufacturing overhead for the
year as well as the manufacturing overhead at capacity. It is further assumed that this is
also the actual amount of manufacturing overhead for the year.
A.$1,392.00
B.$1,551.46
C.$1,728.00
D.$1,883.91
20) Schoff Corporation has provided the following data for the most recent month:
Required:
Prepare T-accounts for Raw Materials, Work in Process, Finished Goods,
Manufacturing Overhead, and Cost of Goods Sold. Record the beginning balances and
each of the transactions listed above. Finally, determine the ending balances.
21) Sidell Corporation’s most recent balance sheet and income statement appear below:
22) ( The following data concern an investment project:
The working capital will be released for use elsewhere at the conclusion of the project.
Required:
Compute the project’s net present value.
23) In December, one of the processing departments at Moshier Corporation had ending
work in process inventory of $24,000. During the month, $293,000 of costs were added
to production and the cost of units transferred out from the department was $297,000.
The company uses the FIFO method in its process costing system.
Required:
Construct a cost reconciliation report for the department for the month of December.
24) During July, Heron Corporation plans to serve 23,000 customers. Revenue is $6.80
per customer served. Wages and salaries are $39,900 per month plus $2.50 per customer
served. Supplies are $1.40 per customer served. Insurance is $10,300 per month.
Miscellaneous expenses are $4,800 per month plus $0.20 per customer served.
Required:
Prepare the company’s planning budget for July.
25) Thunder Corporation’s balance sheet and income statement appear below:
The company did not dispose of any property, plant, and equipment, issue any bonds
payable, or repurchase any of its own common stock during the year. The company
declared and paid a cash dividend of $24.
Required:
Prepare a statement of cash flows in good form using the indirect method.
26) Rubendall Corporation’s total current assets are $310,000, its noncurrent assets are
$630,000, its total current liabilities are $250,000, its long-term liabilities are $300,000,
and its stockholders’ equity is $390,000.
27) Carr Corporation’s comparative balance sheet and income statement for last year
appear below:
The company declared and paid $47,000 in cash dividends during the year. It did not
dispose of any property, plant, and equipment during the year.
Required:
Construct in good form the operating activities section of the company’s statement of
cash flows for the year using the direct method.
28) Vandy Corporation’s balance sheet and income statement appear below:
The company sold equipment for $18 that was originally purchased for $14 and that
had accumulated depreciation of $12. It paid a cash dividend of $28 during the year and
did not retire any bonds payable or repurchase any of its own common stock.
Required:
Prepare a statement of cash flows for the year using the indirect method.
29) Adamyan Co. manufactures and sells medals for winners of athletic and other
events. Its manufacturing plant has the capacity to produce 15,000 medals each month;
current monthly production is 12,750 medals. The company normally charges $120 per
medal. Cost data for the current level of production are shown below:
The company has just received a special one-time order for 700 medals at $83 each. For
this particular order, no variable selling and administrative costs would be incurred.
This order would also have no effect on fixed costs.
Required:
Should the company accept this special order? Why?