1) The following is information about the units produced and the total manufacturing
costs for Rose’s Rug Company for the past six months.
Rose’s Rug Company uses the high-low method to estimate its costs. Answer the
following questions:
a.What is the variable cost per unit?
b.What is the monthly fixed manufacturing cost?
c.Write the cost equation that could be used to predict Rose’s Rug Company’s total
manufacturing costs.
d.What will the total monthly manufacturing costs be if the company produces 28,000
units?
2) Yummy-Tummy Foods has the following information about its standards and
production activity for November:
How much are the standard overhead costs allocated to actual production?
A) $170,400
B) $142,000
C) $85,000
D) $57,500
3) 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
4) 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 times-interest-earned ratio for the current year?
A) 1.46 times
B) 1.00 times
C) 5.12 times
D) 4.12 times
5) 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.
The variable cost per ice cream cone using the high-low method is
A) $0.25.
B) $4.00.
C) $0.63.
D) $1.19.
6) 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 acid-test ratio for the current year?
A) 0.35
B) 1.27
C) 5.38
D) 0.77
7) In a (an) ________ company, salaries and benefits make up over 70% of the total
costs.
A) merchandising
B) service
C) manufacturing
D) All companies have a high percentage of labor costs.
8) Which of the following roles in an organization is responsible for the oversight of the
vice president of operations?
A) COO
B) Board of Directors
C) CFO
D) CEO
9) The following information relates to Woolf Unlimited for the past two years.
What is the book value per share of common stock for the current year?
A) $38.80
B) $96.00
C) $69.20
D) $13.00
10) The management accountant at Light Manufacturing oversees the company’s
day-to-day operations at the firm. The management accountant observed that the
company generated $800,000 in product sales and the management accountant uses that
information to run the daily business operations. The information is also to the
management accountant because the data reveals which products generate the most
sales; and, the management accountant uses that information to adjust products and
develop the marketing strategy.
Which of the following management accounting responsibilities is the management
accountant using in this example?
A) Planning
B) Directing
C) Controlling
D) Designing
E) Implementing
11) Cross Roads Manufacturing currently uses a traditional costing system. The
company allocates overhead to its two products, Zips and Dees, using a predetermined
manufacturing overhead rate based on direct labor hours. Here is data related to the
company’s two products:
The amount of manufacturing overhead that would be allocated to one unit of Dees
using an activity-based costing system would be closest to
A) $94.82.
B) $64.46.
C) $48.53.
D) $13.20.
12) In a company that uses the direct method to prepare the statement of cash flows, the
amount of cash it pays to employees is computed as
A) salary expense plus the ending balance salaries payable.
B) salary expense plus the decrease in salaries payable.
C) salary expense plus the increase in salaries payable.
D) salary expense plus the beginning balance in salaries payable.
13) The McCumber Corporation data for the current year:
With respect to selling/general expenses, what would a horizontal analysis report?
A) The current ratio is 0.92.
B) There was a 4.47% increase from prior to current year.
C) There was a 4.28% decrease from prior to current year.
D) Selling/general expenses are 7.74% of net sales revenue.
14) Which of the following cost of quality categories represent the cost incurred “lost
profits from lost customers?”
A) Prevention costs
B) Appraisal costs
C) External failure costs
D) Internal failure costs
15) The management accountant at Technology Innovators determined $500,000 is the
organization’s earning goal to accommodate the organizational plan during the first
quarter during a new year. The accountant realizes that to achieve the new earning goal,
the operations manager needs to increase the price of technology parts charged to a
consumer to $250.00 per unit. The manager is scheduling a new staff meeting to
determine if they need to increase the marketing efforts at the firm, or if they need to
design a new part that uses materials that are less expensive to produce.
Which of the following management responsibilities is the managerial accountant using
in this example?
A) Directing
B) Planning
C) Controlling
D) Implementing
E) Designing
16) A company uses the direct method to prepare the statement of cash flows. It
presents the following data on its financial statements:
*Relates solely to the acquisition of inventory
Which of the following is correct about accounts receivable in the operating activities
category of the cash flow statement?
A) The increase of $15,000 will be subtracted from net income.
B) The increase of $15,000 will be subtracted from sales to determine cash received
from customers.
C) The increase of $15,000 will be added to sales to determine cash received from
customers.
D) The increase of $15,000 will be added to net income.
17) 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
18) The Nichols Corporation data for the current year:
What would a horizontal analysis report with respect to current assets?
A) Inventory turnover of 9.17 times
B) Current ratio of 1.06
C) A 26.00% increase in current assets
D) Current assets as 40.60% of total assets
19) The Frito-Lay, a stand-alone division of PepsiCo may be classified as a(n)
A) investment center.
B) cost center.
C) profit center.
D) revenue center.
20) The ________reveals whether or not additional sales revenue can offset an increase
in costs in the flexible budget performance report.
A) flexible budget variance
B) static budget variance
C) sales volume variance
D) actual variance
21) (Annuity FV Table Required) Jennifer recently earned a degree in accounting and
her first employment opportunity is an accountant at a major corporation. The 401K
portion of her employment package has a personal investment cap at 20% of her salary
and the employer contribution portion is 50% of her contribution. Her annual salary is
$56,500 and she chose to invest 14% annually. Calculate the value of her 401K after 10
years at 4%, and then calculate the value of her 401K had she invested the maximum
amount that her employer would match.
22) The managerial accountant at the Mill Factory informed the factory manager that
the costs to manufacture 20,000 units of a part include the following costs:
The Mill Factory noted that $70,000 of its fixed costs to produce the product is an
avoidable cost. The managerial accountant considers whether the company should make
the product or buy the product from the Frame Factory because the managerial
accountant at the Frame Factory offered to produce and sell 20,000 units of the same
product to the manager at the Mill Factory at $50 per unit. Should the managerial
accountant make-or-buy the product at $50 per unit? What is the total cost to make the
product? What is the total cost to buy the product? Explain your answer.
23) Stacy’s Manufacturing Company manufactures parts to accommodate the needs of
bicycle shops. The managerial accountant reported the following data:
Compute the average manufacturing cost per unit. What is the amount of ending
finished goods inventory?
24) The following direct materials variance computations are incomplete. Fill in the
missing values, and identify the direct materials flexible budget variance as favorable or
unfavorable.
25) The managerial accountant at Coffee and Tea Manufacturing manufactures three
different types of coffee for consumers to enjoy in the marketplace. The managerial
accountant reported the following information about the cases of coffee products
Product A, Product B, and Product C:
Product A uses 1 machine-hour to produce 1 case of coffee; and, Products B and C use
2 machine hours to produce 1 case of coffee. There are 1,000 available machine hours
to produce each product. Calculate the contribution margin per unit, the contribution
margin ratio, and the available capacity per machine-hour for each coffee product A, B,
and C.
26) The managerial accountant at the Organic Food Shoppe used the indirect method to
prepare the Statement of Cash Flows and reported the following data:
The managerial accountant is required to determine the amount of free cash flow at the
company. Calculate the free cash flow at the company and list at least three ways the
company can use the free cash flow at the business.
27) Identify four advantages of standard costs and variances.
28) The managerial accountant reviews the report from the internal audit function that
ensures the company’s internal controls and risk management policies are functioning
properly. According to the report, there were discrepancies in the internal controls that
are not in conformance with the organizational policy and applicable law. The
managerial accountant suspects that the CEO is embezzling $30,000 per quarter. What
should the managerial accountant do about this discrepancy? If the accountant fails to
act on this issue, what standard according to the IMA Statement of Ethical Professional
Practice does the accountant violate?