1) zents inc. produces and sells a single product. the selling price of the product is
$240.00 per unit and its variable cost is $108.00 per unit. the fixed expense is $407,880
per month.
the break-even in monthly dollar sales is closest to:
a.$685,293
b.$741,600
c.$906,400
d.$407,880
2) clopton clinic uses the step-down method to allocate service department costs to
operating departments. the clinic has two service departments, personnel and
information technology (it), and two operating departments, family medicine and
geriatric medicine. data concerning those departments follow:
personnel costs are allocated first on the basis of employees and it costs are allocated
second on the basis of pcs.
in the first step of the allocation, the amount of personnel department cost allocated to
the family medicine department is closest to:
a.$20,285
b.$17,929
c.$18,560
d.$39,774
3) inventories consisting of units of product that are only partially complete are called
_______________.
a.finished goods
b.raw materials
c.work in process
d.none of these
4) elgot company produces a single product. the cost of producing and selling a single
unit of this product at the company’s normal activity level of 30,000 units per month is
as follows:
the normal selling price of the product is $51.10 per unit.
an order has been received from an overseas customer for 3,000 units to be delivered
this month at a special discounted price. this order would have no effect on the
company’s normal sales and would not change the total amount of the company’s fixed
costs. the variable selling and administrative expense would be $0.50 less per unit on
this order than on normal sales.
direct labor is a variable cost in this company.
suppose there is not enough idle capacity to produce all of the units for the overseas
customer and accepting the special order would require cutting back on production of
1,200 units for regular customers. the minimum acceptable price per unit for the special
order is closest to:
a.$51.10
b.$39.68
c.$40.90
d.$49.40
5) sullens inc, which produces and sells a single product, has provided its contribution
format income statement for july.
if the company sells 8,300 units, its net operating income should be closest to:
a.$23,924
b.$21,900
c.$24,500
d.$18,700
6) sween corporation produces and sells two products. data concerning those products
for the most recent month appear below:
the fixed expenses of the entire company were $27,530. if the sales mix were to shift
toward product z45b with total sales remaining constant, the overall break-even point
for the entire company:
a.would decrease
b.could increase or decrease
c.would increase
d.would not change
7) dadisman corporation’s most recent balance sheet and income statement appear
below:
dividends on common stock during year 2 totaled $30 thousand. dividends on preferred
stock totaled $20 thousand. the market price of common stock at the end of year 2 was
$6.75 per share.
the earnings per share of common stock for year 2 is closest to:
a.$1.25
b.$0.70
c.$0.50
d.$1.00
8) in a job-order costing system, the journal entry to record the application of overhead
cost to jobs would include:
a.a credit to the manufacturing overhead account
b.a credit to the work in process inventory account
c.a debit to cost of goods sold
d.a debit to the manufacturing overhead account
9) starrs company has current assets of $300,000 and current liabilities of $200,000.
which of the following transactions would increase its working capital?
a.prepayment of $50,000 of next year’s rent
b.refinancing $50,000 of short-term debt with long-term debt
c.acquisition of land valued at $50,000 by issuing new common stock
d.purchase of $50,000 of marketable securities for cash
10) fulton company’s price-earnings ratio is 8.0 and the market price of a share of
common stock is $32. the company has 3,000 shares of preferred stock outstanding with
each share receiving a dividend of $3 per share. the earnings per share of common stock
is:
a.$10
b.$7
c.$4
d.$3
11) financial statements for larkins company appear below:
dividends during year 2 totaled $135 thousand, of which $12 thousand were preferred
dividends. the market price of a share of common stock on december 31, year 2 was
$150.
larkins company’s dividend payout ratio for year 2 was closest to:
a.42.9%
b.24.6%
c.40.6%
d.14.8%
12) an analysis of past maintenance costs indicates that maintenance cost is an average
of $0.20 per machine-hour at an activity level of 10,000 machine-hours and $0.25 per
machine-hour at an activity level of 8,000 machine-hours. assuming that this activity is
within the relevant range, what is the total expected maintenance cost if the activity
level is 8,700 machine-hours?
a.$2,000
b.$400
c.$2,250
d.$1,740
13) the cfo of stoffer corporation has provided the following data for october. the
beginning balance in the raw materials inventory account was $39,000. during the
month, the company made raw materials purchases amounting to $68,000. at the end of
the month, the balance in the raw materials inventory account was $28,000. direct labor
cost was $29,000 and manufacturing overhead was $78,000. the beginning balance in
the work in process account was $11,000 and the ending balance was $13,000. the
beginning balance in the finished goods account was $37,000 and the ending balance
was $47,000. sales totaled $240,000. selling expense was $21,000 and administrative
expense was $27,000.
the net operating income for october was:
a.$85,000
b.$18,000
c.$17,000
d.$66,000
14) the _______________ approach to the income statement organizes costs by
function.
a.contribution
b.traditional
c.comparable
d.none of these is true.