In a statement of cash flows, all of the following would be classified as financing
activities except:
A. the collection of cash related to a loan made to another entity.
B. the payment of a cash dividend on the company’s own common stock.
C. the cash paid to retire bonds payable.
D. the sale of the company’s own common stock for cash.
Answer:
A proper journal entry to close overapplied manufacturing overhead to Cost of Goods
Sold would be:
A. Option A
B. Option B
C. Option C
D. Option D
Answer:
Buell Corporation has provided the following data for June.
The budget variance for June is:
A. $5,740 F
B. $3,610 F
C. $3,610 U
D. $5,740 U
Answer:
Jumper Company uses the weighted-average method in its process costing system. The
following data pertain to operations in the first processing department for a recent
month:
How much cost, in total, was transferred to the next department during the month?
A. $315,200
B. $306,000
C. $312,000
D. $317,100
Answer:
Financial statements for Marcell Company appear below:
Marcell Company’s working capital (in thousands of dollars) at the end of Year 2 was
closest to:
A. $470
B. $20
C. $520
D. $1,240
Answer:
Operating data from Tindall Company for last year follows:
The residual income was:
A. $18,000
B. $10,000
C. $12,000
D. $16,000
Answer:
Stanfa Corporations standard wage rate is $10.50 per direct labor-hour (DLH) and
according to the standards, each unit of output requires 8.0 DLHs. In January, 3,700
units were produced, the actual wage rate was $10.80 per DLH, and the actual hours
were 25,280 DLHs. In the journal entry to record the incurrence of direct labor costs in
January, the Work in Process entry would consist of a:
A) debit of $310,800.
B) credit of $273,024.
C) credit of $310,800.
D) debit of $273,024.
Answer:
The Baily Division recorded operating data as follows for the past two years:
Baily Division’s turnover was exactly the same in both Year 1 and Year 2.
The margin in Year 2 was:
A. 18.75%
B. 27.00%
C. 22.50%
D. 12.00%
Answer:
James Company has a margin of safety percentage of 20% based on its actual sales. The
break-even point is $200,000 and the variable expenses are 45% of sales. Given this
information, the actual profit is:
A. $27,500
B. $18,000
C. $22,500
D. $22,000
Answer:
Mclaughlin Corporation’s most recent balance sheet and income statement appear
below:
The times interest earned for Year 2 is closest to:
A. 2.73
B. 4.91
C. 7.01
D. 3.91
Answer:
Njombe Corporation manufactures a variety of products. In the past, Njombe has been
using a traditional costing system in which the predetermined overhead rate was 150%
of direct labor cost. Selling prices had been set by multiplying total product cost by
200%. Sensing that this system was distorting costs and selling prices, Njombe has
decided to switch to an activity-based costing system for manufacturing overhead costs
using three activity cost pools. Selling prices are still to be set at 200% of unit product
cost under the new system. Information on these cost pools for next year are as follows:
Information (on a per unit basis) related to three popular products at Njombe are as
follows:
Under the activity-based costing system, what would be the selling price of one unit of
Model #36?
A. $2,536
B. $2,712
C. $4,080
D. $5,506
Answer:
Daane Company had only one job in process on May 1. The job had been charged with
$1,000 of direct materials, $3,302 of direct labor, and $5,382 of manufacturing
overhead cost. The company assigns overhead cost to jobs using the predetermined
overhead rate of $20.70 per direct labor-hour.
During May, the following activity was recorded:
Work in process inventory on May 30 contains $2,921 of direct labor cost. Raw
materials consist solely of items that are classified as direct materials.
The cost of goods manufactured for May was:
A. $78,500
B. $78,100
C. $77,150
D. $74,822
Answer:
Reference: 8-55
The following data have been provided by Pollo Corporation:
Lubricants and supplies are both elements of variable manufacturing overhead.
The variable overhead rate variance for lubricants is closest to:
A) $1,425 U
B) $13,448 U
C) $12,023 U
D) $12,023 F
Answer:
Kharbanda Corporation uses the FIFO method in its process costing system. Operating
data for the Enameling Department for the month of May appear below:
What were the equivalent units for conversion costs in the Enameling Department for
May?
A. 57,960
B. 55,800
C. 51,000
D. 55,920
Answer:
Hardouin Company uses the weighted-average method in its process costing system.
The first processing department, the Welding Department, started the month with
22,000 units in its beginning work in process inventory that were 20% complete with
respect to conversion costs. The conversion cost in this beginning work in process
inventory was $23,320. An additional 97,000 units were started into production during
the month and 101,000 units were completed in the Welding Department and
transferred to the next processing department. There were 18,000 units in the ending
work in process inventory of the Welding Department that were 40% complete with
respect to conversion costs. A total of $529,380 in conversion costs were incurred in the
department during the month.
What would be the cost per equivalent unit for conversion costs for the month? (Round
off to three decimal places.)
A. $5.300
B. $5.458
C. $4.603
D. $5.108
Answer:
Chaffee Corporation staffs a helpline to answer questions from customers. The costs of
operating the helpline are variable with respect to the number of calls in a month. At a
volume of 33,000 calls in a month, the costs of operating the helpline total $742,500.
To the nearest whole cent, what should be the average cost of operating the helpline per
call at a volume of 36,100 calls in a month? (Assume that this call volume is within the
relevant range.)
A. $21.54
B. $20.57
C. $21.34
D. $22.50
Answer:
Hick Corporation’s most recent balance sheet and income statement appear below:
Dividends on common stock during Year 2 totaled $60 thousand. Dividends on
preferred stock totaled $20 thousand. The market price of common stock at the end of
Year 2 was $9.57 per share.
The book value per share at the end of Year 2 is closest to:
A. $4.35
B. $5.35
C. $0.55
D. $6.95
Answer:
Kelln Corporation’s most recent comparative balance sheet and income statement
appear below:
The company paid a cash dividend and it did not dispose of any property, plant, and
equipment. The company did not issue any bonds payable or repurchase any of its own
common stock. The following question pertain to the company’s statement of cash
flows.
The net cash provided by (used in) investing activities for the year was:
A. $(28)
B. $(58)
C. $28
D. $58
Answer:
A tile manufacturer has supplied the following data:
The company’s contribution margin ratio is closest to:
A. 54.3%
B. 8.9%
C. 45.7%
D. 36.6%
Answer:
Over an extended period of time in which the final ending inventories are zero, the
accumulated net operating income figures reported under absorption costing will be:
A. greater than those reported under variable costing.
B. less than those reported under variable costing.
C. the same as those reported under variable costing.
D. higher or lower since no generalization can be made.
Answer:
Reference: 8-44
Carskadon Corporation makes a product that uses a material with the following direct
material standards:
The company produced 3,000 units in December using 6,270 pounds of the material.
During the month, the company purchased 7,100 pounds of the direct material at a total
cost of $13,490. The direct materials purchases variance is computed when the
materials are purchased.
The materials price variance for December is:
A) $710 F
B) $710 U
C) $660 F
D) $660 U
Answer:
Turner Company’s contribution margin ratio is 15%. If the degree of operating leverage
is 12 at the $150,000 sales level, net operating income at the $150,000 sales level must
equal:
A. $1,500
B. $2,700
C. $2,160
D. $1,875
Answer:
Peluso Company, a manufacturer of snowmobiles, is operating at 70% of plant capacity.
Peluso’s plant manager is considering making the headlights now being purchased from
an outside supplier for $11 each. The Peluso plant has idle equipment that could be used
to manufacture the headlights. The design engineer estimates that each headlight
requires $4 of direct materials, $3 of direct labor, and $6.00 of manufacturing overhead.
Forty percent of the manufacturing overhead is a fixed cost that would be unaffected by
this decision. A decision by Peluso Company to manufacture the headlights should
result in a net gain (loss) for each headlight of:
A. $(2.00)
B. $1.60
C. $0.40
D. $2.80
Answer:
Byron Company, which has only one product, has provided the following data
concerning its most recent month of operations:
What is the unit product cost for the month under absorption costing?
A. $83
B. $92
C. $86
D. $77
Answer:
A company has provided the following data:
If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and
all other factors remain the same, net operating income will:
A. decrease by $31,875.
B. decrease by $15,000.
C. increase by $20,625.
D. decrease by $3,125.
Answer:
Wolbers Company has an acid-test ratio of 1.4. Which of the following events will
cause this ratio to decrease?
A. Selling merchandise on account.
B. Paying a cash dividend already declared.
C. Borrowing using a short-term note.
D. Selling equipment at a loss.
When the acid-test ratio is greater than 1 (e.g., $1,400 ÷ $1,000 = 1.4) then increasing
both portions of the fraction by an equal amount would reduce the current ratio (e.g.,
$1,500 ÷ $1,100 = 1.36.)
Answer:
A continuous (or perpetual) budget:
A. is prepared for a range of activity so that the budget can be adjusted for changes in
activity.
B. is a plan that is updated monthly or quarterly, dropping one period and adding
another.
C. is a strategic plan that does not change.
D. is used in companies that experience no change in sales.
Answer:
Lucas Company recorded the following events last year:
On the statement of cash flows, some of these events are classified as operating
activities, some are classified as investing activities, and some are classified as
financing activities.
Based solely on the information above, the net cash provided by (used in) financing
activities on the statement of cash flows would be:
A. $85,000
B. $(80,000)
C. $(145,000)
D. $170,000
Answer:
The following labor standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
Required:
a. What is the labor rate variance for the month?
b. What is the labor efficiency variance for the month?
Answer:
Madengrad Company manufactures a single product called a densimeter. This product
is a density monitoring device attached to large industrial mixing machines used in
flour, rubber, petroleum, and chemical manufacturing. A densimeter sells for $900 per
unit. The following variable expenses are incurred to produce and sell each densimeter:
Madengrad’s annual fixed expenses are $6,600,000.
If Madengrad Company achieves a sales and production volume of 8,000 units, the
annual net operating income (loss) is expected to be:
A. $(4,200,000)
B. $1,780,000
C. $(2,520,000)
D. $(420,000)
Answer:
Rickers Inc. produces and sells two products. Data concerning those products for the
most recent month appear below:
The fixed expenses of the entire company were $38,940. The break-even point for the
entire company is closest to:
A. $80,590
B. $76,353
C. $38,940
D. $46,060
Answer:
Last year the return on total assets in Jeffrey Company was 8.5%. The total assets were
2.9 million at the beginning of the year and 3.1 million at the end of the year. The tax
rate was 30%, interest expense totaled $110 thousand, and sales were $5.2 million. Net
income for the year was:
A. $145,000
B. $222,000
C. $332,000
D. $178,000
Answer:
Dieringer Corporation’s most recent balance sheet and income statement appear below:
The average sale period for Year 2 is closest to:
A. 36.9 days
B. 248.0 days
C. 22.3 days
D. 32.8 days
Answer:
Aide Industries is a division of a major corporation. Data concerning the most recent
year appears below:
The division’s turnover is closest to:
A. 20.00
B. 4.35
C. 0.22
D. 3.57
Answer: