1) Selected financial information for Brookeville Manufacturing is presented in the
following table (000s omitted).
What was cost of goods sold?
A) $1,450
B) $1,350
C) $1,470
D) $ 790
2) Which of the following product costing systems is normally used to assign costs to
goods that are mass produced?
A) Fixed costing
B) Job costing
C) Process costing
D) LIFO costing
3) The Bedford Corporation reported the following income statement and balance sheet
amounts and additional information for the end of the current year.
Inventory and prepaid expenses account for $30,000 of the current year’s current assets.
Average inventory for the current year is $36,250.
Average net accounts receivable for the current year is $45,000.
There are 35,000 shares of common stock outstanding.
Total dividends paid during the current year were $17,000.
The market price per share of common stock is $20.
What is the rate of return on common stockholder’s equity for the current year?
A) 37.49%
B) 2.43%
C) 54.06%
D) 41.69%
4) The ________ is best for managers to use in order to plan revenues and expenses at
different sales volumes.
A) flexible budget
B) capital budget
C) static budget
D) master budget
5) The Akron Slugger Company produces various types of wooden baseball bats. It has
calculated the average cost per unit of a production level of 7,500 bats to be $10.00. If
$22,500 of the total costs are fixed, what is the variable cost of producing each bat?
A) $10.00
B) $52,500
C) $7.00
D) $3.00
6) Compute the missing amounts.
Miami Company Orlando Company
Sales $ 300,000 (D)
Cost of Goods Sold
Beginning Inventory (A) 65,000
Purchases and Freight-In 119,000 (E)
Cost of goods available for sale (B) 192,000
Ending inventory 5,000 3,000
Cost of goods sold 115,000 (F)
Gross Margin 185,000 124,000
Selling and Administrative Expenses (C) 90,000
Operating Income 32,000 (G)
7) The unemployment rate is high in the city in which a company has a factory. The
company finds that they are able to pay new employees a lower wage per hour than
when the unemployment rate was lower a year ago. Which variance would be directly
impacted?
A) Materials price variance
B) Materials quantity variance
C) Labor efficiency variance
D) Labor rate variance
8) Which of the following is not an activity in an ABC system that determines the cost
of a manufactured product?
A) Machining
B) Inspecting
C) Accounting
D) Materials handling
9) Managers may intentionally build slack into the budget
A) because of uncertainty about the future
B) to make their performance look better
C) to have the resources they need in the event of budget cuts
D) because of all of the above
10) When direct materials are requisitioned, they flow directly into
A) cost of goods sold
B) finished goods inventory
C) work in process inventory
D) manufacturing overhead
11) Which one of the following reports is most likely to be required to be audited by an
outside entity?
A) Monthly financial statements
B) Annual financial budgets
C) Annual financial statements
D) All of the above
12) How is operating income affected if the number of units sold exceeds the number of
units produced?
A) Operating income would be higher under a variable costing income statement
B) Operating income would be lower under a variable costing income statement
C) Operating income would be higher under an absorption costing income statement
D) Operating income would be the same under both a variable costing and absorption
costing income statement
13) Sky High Seats manufactures seats for airplanes. The company has the capacity to
produce 100,000 seats per year, but is currently producing and selling 75,000 seats per
year. The following information relates to current production:
If a special sales order is accepted for 4,000 seats at a price of $325 per unit, fixed costs
remain unchanged, and no variable marketing and administrative costs will be incurred
for this order, how would operating income be affected? (NOTE: Assume regular sales
are not affected by the special order.)
A) Increase by $2,180,000
B) Increase by $420,000
C) Increase by $220,000
D) Decrease by $420,000
14) Gluck Metal Works stamps sheet metal into blanks that are used in a variety of
consumer products. The average cost for sheet metal is $75 per ton. Gluck’s waste
disposal company charges $50 per ton to dispose of manufacturing waste. The stamping
process currently employed by Gluck generates an average of 120 tons of waste per
month.
Gluck has developed a new system that would increase the efficiency of its stamping
process. The new system has an annual cost of $45,000, but would reduce stamping
waste by 50%, the remaining waste would be sold to a recycler for $30 per ton. What is
the net savings if Gluck implements this new system?
A) $102,600
B) $147,600
C) $72,000
D) $21,600
15) Selected financial data for The Portland Porcelain Works Coffee Mug Division is as
follows:
What is The Portland Porcelain Works Coffee Mug Division capital turnover?
A) 5.6
B) 12.8
C) 3.2
D) 1.7
16) A company uses the indirect method to prepare the statement of cash flows. It
presents the following amounts on its financial statements.
*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to inventory?
A) The decrease of $21,000 will be subtracted from net income
B) The decrease of $21,000 will be subtracted from cost of goods sold
C) The decrease of $21,000 will be added to net income
D) The decrease of $21,000 will be added to cost of goods sold
17) Jackie has the following information to evaluateher current salary of $74,000 versus
total revenues of $100,000 and expenses of $65,000 from starting a new business. How
much is the opportunity cost associated with staying at her current job?
A) $35,000
B) $165,000
C) $74,000
D) $(9,000)
18) The line that begins at the origin on a CVP graph represents
A) total fixed expenses
B) total sales revenues
C) total expenses
D) both the total expenses and the total sales revenues
19) The Stemple Corporation data for the current year:
What would a horizontal analysis report with respect to net income before income tax
expense and net income?
A) Both net income before tax expense and net income are 9.16% of net sales revenue
B) There was an increase in net income of 55.71%
C) Both net income before income tax expense and net income increased by $89,500
D) The current ratio is 1.24
20) Which of the following alternatives reflects the proper order of preparing
components of the master budget?
1> Financial budget
2> Operating budget
3> Capital expenditures budget
A) 1, 3, 2
B) 2, 3, 1
C) 1, 2, 3
D) 3, 1, 2
21) At Billy Distillery, direct materials are added at the beginning of the process and
conversion costs are added throughout the process. Data for the finishing department
follows:
Required:
a.What are the equivalent units for conversion costs?
b. What is the cost per equivalent unit for conversion costs?
b.What are the equivalent units for direct materials?
d.What are the total number of physical units for which to account?
22) Dozen Bakery makes cupcakes and cookies. Dozen gathered the following
information for the current year regarding its use of flour and butter (flour is a direct
material for cupcakes and butter is a direct material for cookies):
What is the direct material quantity variance for butter in the cookies?
A) $2,900 favorable
B) $1,900 favorable
C) $2,900 unfavorable
D) $1,900 unfavorable
23) Which of the following would be considered a discretionary fixed cost?
A) Property taxes and insurance
B) Advertising
C) Employees wages
D) Depreciation
24) The balance sheet of a service company would include which of the following?
A) Factory equipment depreciation
B) Cost of goods manufactured
C) Accounts receivable
D) Cost of goods sold
25) A shampoo manufacturer offers the following information:
The units in ending WIP inventory were 60% complete for materials and 40% complete
for conversion costs.
On December 31, the cost per equivalent unit for conversion costs would be closest to
A) $32.45
B) $27.82
C) $42.00
D) $39.59