1) craston company’s net income last year was $70,000. the company paid preferred
dividends of $10,000 and its average common stockholders’ equity was $480,000. the
company’s return on common stockholders’ equity for the year was closest to:
a.12.5%
b.14.6%
c.16.7%
d.2.1%
2) olea corporation has provided the following data:
the inventory turnover for this year is closest to:
a.2.50
b.1.08
c.0.92
d.2.41
3) the following data (in thousands of dollars) have been taken from the accounting
records of larsen corporation for the just completed year.
required:
a. prepare a schedule of cost of goods manufactured in good form.
b. compute the cost of goods sold.
c. using data from your answers above as needed, prepare an income statement in good
form.
4) excerpts from stys corporation’s most recent balance sheet and income statement
appear below:
dividends on common stock during year 2 totaled $50 thousand. dividends on preferred
stock totaled $10 thousand. the market price of common stock at the end of year 2 was
$8.20 per share.the return on total assets for year 2 is closest to:
a.8.15%
b.9.60%
c.9.67%
d.8.21%
5) which of the following is not correct?
a.if the denominator level of activity and the standard hours allowed for the output of
the period are the same, then there is no volume variance
b.if the denominator level of activity is greater than the standard hours allowed for the
output of the period, then the volume variance is unfavorable
c.if the denominator level of activity is greater than the standard hours allowed for the
output of the period, then the volume variance is favorable
d.the volume variance is the most appropriate measure of the utilization of plant
facilities
6) veron corporation purchases potatoes from farmers. the potatoes are then peeled,
producing two intermediate products-peels and depeeled spuds. the peels can then be
processed further to make a cocktail of organic nutrients. and the depeeled spuds can be
processed further to make frozen french fries. a batch of potatoes costs $35 to buy from
farmers and $19 to peel in the company’s plant. the peels produced from a batch can be
sold as is for animal feed for $24 or processed further for $14 to make the cocktail of
nutrients that are sold for $48. the depeeled spuds can be sold as is for $34 or processed
further for $29 to make frozen french fries that are sold for $55.
required:
a. assuming that no other costs are involved in processing potatoes or in selling
products, how much money does the company make from processing one batch of
potatoes into the cocktail of organic nutrients and frozen french fries? show your work!
b. should each of the intermediate products, peels and depeeled spuds, be sold as is or
processed further into an end product? explain.
7) inspection costs at one of pulley corporation’s factories are listed below:
management believes that inspection cost is a mixed cost that depends on units
produced.
using the high-low method, the estimate of the fixed component of inspection cost per
month is closest to:
a.$2,749
b.$10,519
c.$9,980
d.$10,597
8) albro corporation keeps careful track of the time required to fill orders. the times
recorded for a particular order appear below:
the manufacturing cycle efficiency (mce) was closest to:
a.0.05
b.0.57
c.0.14
d.0.16
9) higgenbotham clinic uses client-visits as its measure of activity. during may, the
clinic budgeted for 3,600 client-visits, but its actual level of activity was 3,580
client-visits. the clinic has provided the following data concerning the formulas to be
used in its budgeting for may:
the net operating income in the planning budget for may would be closest to:
a.$18,274
b.$13,920
c.$18,479
d.$13,616
10) abdol 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.$38
b.$73
c.$44
d.$79
11) (ignore income taxes in this problem.) jarvey company is studying a project that
would have a ten-year life and would require a $450,000 investment in equipment
which has no salvage value. the project would provide net operating income each year
as follows for the life of the project:
the company’s required rate of return is 12%. what is the payback period for this
project?
a.3 years
b.2 years
c.4.28 years
d.9 years
12) 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.
for year 2, sales adjusted to a cash basis would be:
a.$111,000
b.$120,000
c.$126,000
d.$132,000
13) cintron corporation’s total current assets are $370,000, its noncurrent assets are
$740,000, its total current liabilities are $300,000, its long-term liabilities are $430,000,
and its stockholders’ equity is $380,000. the current ratio is closest to:
a.0.81
b.0.70
c.0.50
d.1.23