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1) Smee Inc. produces and sells a single product. The selling price of the product is
$130.00 per unit and its variable cost is $52.00 per unit. The fixed expense is $281,580
per month.
The break-even in monthly dollar sales is closest to:
A.$281,580
B.$484,943
C.$703,950
D.$469,300
2) Bobe Air uses two measures of activity, flights and passengers, in the cost formulas
in its budgets and performance reports. The cost formula for plane operating costs is
$44,580 per month plus $2,390 per flight plus $8 per passenger. The company expected
its activity in May to be 68 flights and 211 passengers, but the actual activity was 71
flights and 210 passengers. The actual cost for plane operating costs in May was
$215,140.
The spending variance for plane operating costs in May would be closest to:
A.$810 U
B.$6,352 U
C.$810 F
D.$6,352 F
3) The company's accounts receivable turnover for Year 2 is closest to:
A.12.95
B.1.02
C.0.98
D.13.06
4) The profitability index in a volume trade-off decision should be computed by:
A.dividing each product's contribution margin by the amount of the constrained
resource used by the product.
B.dividing each product's contribution margin by its selling price.
C.dividing each product's selling price by the amount of the constrained resource used
by the product.
D.dividing each product's variable cost by its selling price.
5) The Jenkins Division recorded operating data as follows for the past year:
For the past year, the turnover used in ROI calculations was:
A.4
B.3
C.2
D.12
6) Lantagne Clinic uses client-visits as its measure of activity. During May, the clinic
budgeted for 3,800 client-visits, but its actual level of activity was 3,820 client-visits.
The clinic has provided the following data concerning the formulas used in its
budgeting and its actual results for May:
Data used in budgeting:
Actual results for May:
The activity variance for net operating income in May would be closest to:
A.$386 F
B.$386 U
C.$284 U
D.$284 F
7) Under variable costing, which of the following is not expensed in its entirety in the
period in which it is incurred?
A.fixed manufacturing overhead cost
B.fixed selling and administrative expense
C.variable selling and administrative expense
D.variable manufacturing overhead cost
8) The following labor standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What is the labor rate variance for the month?
A.$1,920 F
B.$240 U
C.$1,920 U
D.$240 F
9) Munar Corporation uses activity-based costing to compute product margins.
Overhead costs have already been allocated to the company's three activity cost
pools-Machining, Order Filling, and Other. The costs in those activity cost pools appear
below:
Machining costs are assigned to products using machine-hours (MHs) and Order Filling
costs are assigned to products using the number of orders. The costs in the Other
activity cost pool are not assigned to products. Activity data appear below:
Finally, sales and direct cost data are combined with Machining and Order Filling costs
to determine product margins.
What is the product margin for Product X6 under activity-based costing?
A.$22,400
B.$3,572
C.$29,700
D.$17,302
10) Czlapinski Corporation is considering a capital budgeting project that would require
an initial investment of $440,000 and working capital of $32,000. The working capital
would be released for use elsewhere at the end of the project in 4 years. The investment
would generate annual cash inflows of $147,000 for the life of the project. At the end of
the project, equipment that had been used in the project could be sold for $11,000. The
company's discount rate is 7%. The net present value of the project is closest to:
A.$66,282
B.$34,282
C.$159,000
D.$58,698
11) A company's current ratio is greater than 1. Purchasing raw materials on credit
would:
A.increase the current ratio.
B.decrease the current ratio.
C.increase net working capital.
D.decrease net working capital.
12) Nicolini 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 October, the kennel budgeted
for 2,200 tenant-days, but its actual level of activity was 2,250 tenant-days. The kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for October:
Data used in budgeting:
Actual results for October:
The food and supplies in the flexible budget for October would be closest to:
A.$27,775
B.$26,571
C.$27,793
D.$27,180
13) Pardoe, Inc., manufactures a single product in which variable manufacturing
overhead is assigned on the basis of standard direct labor-hours. The company uses a
standard cost system and has established the following standards for one unit of
product:
During March, the following activity was recorded by the company:
The company produced 3,000 units during the month.
A total of 8,000 pounds of material were purchased at a cost of $23,000.
There was no beginning inventory of materials on hand to start the month; at the end of
the month, 2,000 pounds of material remained in the warehouse.
During March, 1,600 direct labor-hours were worked at a rate of $6.50 per hour.
Variable manufacturing overhead costs during March totaled $1,800.
The direct materials purchases variance is computed when the materials are purchased.
The variable overhead efficiency variance for March is:
A.$1,050 F
B.$1,050 U
C.$250 F
D.$250 U
14) Guo Corporation uses the weighted-average method in its process costing system.
This month, the beginning inventory in the first processing department consisted of 500
units. The costs and percentage completion of these units in beginning inventory were:
A total of 9,700 units were started and 9,100 units were transferred to the second
processing department during the month. The following costs were incurred in the first
processing department during the month:
The ending inventory was 85% complete with respect to materials and 75% complete
with respect to conversion costs.
Note: Your answers may differ from those offered below due to rounding error. In all
cases, select the answer that is the closest to the answer you computed. To reduce
rounding error, carry out all computations to at least three decimal places.
The cost per equivalent unit for materials for the month in the first processing
department is closest to:
A.$23.31
B.$23.70
C.$24.43
D.$24.03
15) Epolito Corporation incurred $87,000 of actual Manufacturing Overhead costs
during September. During the same period, the Manufacturing Overhead applied to
Work in Process was $89,000. The journal entry to record the incurrence of the actual
Manufacturing Overhead costs would include a:
A.debit to Work in Process of $89,000
B.credit to Manufacturing Overhead of $87,000
C.debit to Manufacturing Overhead of $87,000
D.credit to Work in Process of $89,000
16) There are two acceptable methods for closing out any balance of underapplied or
overapplied manufacturing overhead. One method involves allocation of the balance
among several accounts, whereas the other closes any balance directly to:
A.Finished Goods inventory.
B.Cost of Goods Sold.
C.Cost of Goods Manufactured.
D.Work in Process inventory.
