1) grundhoefer 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 april, the kennel budgeted
for 2,000 tenant-days, but its actual level of activity was 1,990 tenant-days. the kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for april:
the activity variance for net operating income in april would be closest to:
a.$141 u
b.$2,651 u
c.$2,651 f
d.$141 f
2) (ignore income taxes in this problem.) gimar corporation uses a discount rate of 16%
in its capital budgeting. partial analysis of an investment in automated equipment with a
useful life of 8 years has thus far yielded a net present value of -$423,974. this analysis
did not include any estimates of the intangible benefits of automating this process nor
did it include any estimate of the salvage value of the equipment.
ignoring any cash flows from intangible benefits, to the nearest whole dollar how large
would the salvage value of the automated equipment have to be to make the investment
in the automated equipment financially attractive?
a.$67,836
b.$423,974
c.$1,390,079
d.$2,649,838
3) kimbeth manufacturing makes dust density sensors (dds), a safety device for the
mining industry. the company uses a process costing system and has only a single
processing department. the following information pertains to operations for the month
of may:
the beginning work in process inventory was 60% complete with respect to materials
and 20% complete with respect to conversion costs. the ending work in process
inventory was 90% complete with respect to materials and 40% complete with respect
to conversion costs. the costs were as follows:
using the weighted-average method, the total cost of the units in ending work in process
inventory is closest to:
a.$156,960
b.$86,400
c.$153,960
d.$154,800
4) the management of cerruto corporation has provided the following data concerning
its two products:
the constrained resource is a particular machine that is available for 9,600 minutes each
month.
up to how much should the company be willing to pay to obtain enough of the
constrained resource to satisfy demand for the two existing products?
a.$120.90 per minute
b.$9.30 per minute
c.$13.20 per minute
d.$66.00 per minute
5) cost data relating to the single product produced by the jones company are given
below:
the jones company uses the absorption costing approach to cost-plus pricing described
in the text with a desired markup of 60%. if the company plans to produce and sell
20,000 units each year, the selling price per unit would be:
a.$32.00
b.$41.60
c.$43.20
d.$36.00
6) the holmes division recorded operating data as follows for the past year:
for the past year, the margin was:
a.12.50%
b.13.00%
c.14.75%
d.15.00%
7) ceder products is a division of a major corporation. last year the division had total
sales of $21,520,000, net operating income of $538,000, and average operating assets of
$8,000,000. the company’s minimum required rate of return is 18%.
the division’s margin is closest to:
a.2.5%
b.39.7%
c.6.7%
d.37.2%
8) closter corporation makes three products that use the current constraint, which is a
particular type of machine. data concerning those products appear below:
required:
a. rank the products in order of their current profitability from the most profitable to the
least profitable. in other words, rank the products in the order in which they should be
emphasized. show your work!
b. assume that sufficient constraint time is available to satisfy demand for all but the
least profitable product. up to how much should the company be willing to pay to
acquire more of the constrained resource?
9) balance sheet accounts for hollis, inc. contained the following amounts at the ends of
years 1 and 2:
the company’s income statement for year 2 follows:
there were no sales or retirements of plant and equipment in year 2. cash dividends of
$5,000 were paid during year 2. the company pays no income taxes. the company uses
the direct method to determine the net cash provided by operating activities on the
statement of cash flows.
cost of goods sold adjusted to a cash basis for year 2 would be:
a.$64,000
b.$72,000
c.$82,000
d.$90,000
10) lido company’s standard and actual costs per unit for the most recent period, during
which 400 units were actually produced, are given below:
required:
from the foregoing information, compute the following variances. show whether the
variance is favorable (f) or unfavorable (u):
a. materials price variance.
b. materials quantity variance.
c. direct labor rate variance.
d. direct labor efficiency variance.
e. variable overhead rate variance.
f. variable overhead efficiency variance.
11) last month a manufacturing company had the following operating results:
what was the cost of goods manufactured for the month?
a.$350,000
b.$385,000
c.$377,000
d.$323,000
12) laboe 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 february, the kennel budgeted
for 2,900 tenant-days, but its actual level of activity was 2,940 tenant-days. the kennel
has provided the following data concerning the formulas to be used in its budgeting:
the expendables in the flexible budget for february would be closest to:
a.$26,990
b.$27,354
c.$27,021
d.$27,772
13) maverick company had the following transactions last year:
the total cost added to work in process during the year was:
a.$366,000
b.$340,000
c.$420,000
d.$286,000
14) selected financial data (in thousands of dollars) for barnstable company appear
below:
between year 1 and year 2, the times interest earned ratio:
a.increased
b.decreased
c.remained the same
d.cannot be determined from the data provided
15) loraine company applies manufacturing overhead to jobs using a predetermined
overhead rate of 70% of direct labor cost. any underapplied or overapplied overhead
cost is closed to cost of goods sold at the end of the month. during august, the following
transactions were recorded by the company:
the entry to dispose of the underapplied or overapplied overhead cost for the month
would include:
a.a credit of $100 to cost of goods sold
b.a credit of $6,000 to manufacturing overhead
c.a debit of $6,000 to cost of goods sold
d.a credit of $100 to the manufacturing overhead account
16) (ignore income taxes in this problem.) ursus, inc., is considering a project that
would have a ten-year life and would require a $1,000,000 investment in equipment. at
the end of ten years, the project would terminate and the equipment would have no
salvage value. the project would provide net operating income each year as follows:
all of these items, except for depreciation of $100,000 a year, represent cash flows. the
depreciation is included in the fixed expenses. the company’s required rate of return is
12%.
required:
a. compute the project’s net present value.
b. compute the project’s internal rate of return to the nearest whole percent.
c. compute the project’s payback period.
d. compute the project’s simple rate of return.
17) madtack company’s beginning and ending inventories for the month of november
were as follows:
madtack applies manufacturing overhead cost to jobs at the rate of 70% of direct labor
cost incurred. the company does not close underapplied or overapplied manufacturing
overhead to cost of goods sold until the end of the year.
madtack company’s total manufacturing cost for november was:
a.$502,000
b.$510,000
c.$363,000
d.$495,000
18) a manufacturer of industrial equipment uses a standard costing system in which
standard machine-hours (mhs) is the measure of activity. data from the company’s
flexible budget for manufacturing overhead are given below:
the following data pertain to operations for the most recent period:
what is the predetermined overhead rate to the nearest cent?
a.$14.10
b.$13.82
c.$14.65
d.$14.36
19) (ignore income taxes in this problem.) you have deposited $8,369 in a special
account that has a guaranteed interest rate of 13% 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 8 years? select the amount below that is closest to your
answer.
a.$1,046
b.$1,744
c.$2,134
d.$1,182
20) geneva steel corporation produces large sheets of heavy gauge steel. the company
showed the following amounts relating to its production for the year just completed:
manufacturing overhead for the year was:
a.$84,000
b.$78,000
c.$56,000
d.$72,000
cost of goods available for sale – cost of goods sold
= balance of finished goods inventory at end of year
$288,000 – $238,000 = $50,000
cost of goods sold – beginning finished goods inventory + ending finished goods
inventory = cost of goods manufactured
$238,000 – $45,000 + $50,000 = $243,000