1) The Adams Corporation, a merchandising firm, has budgeted its activity for
November according to the following information:
Sales at $450,000, all for cash.
Merchandise inventory on October 31 was $200,000.
The cash balance November 1 was $18,000.
Selling and administrative expenses are budgeted at $60,000 for November and are paid
for in cash.
Budgeted depreciation for November is $25,000.
The planned merchandise inventory on November 30 is $230,000.
The cost of goods sold is 70% of the selling price.
All purchases are paid for in cash.
There is no interest expense or income tax expense.
The budgeted net income for November is:
A.$50,000
B.$68,000
C.$75,000
D.$135,000
2) The company’s inventory turnover for Year 2 is closest to:
A.3.89
B.1.04
C.3.97
D.4.05
3) Kenrick Corporation uses activity-based costing to compute product margins. In the
first stage, the activity-based costing system allocates two overhead
accounts-equipment expense and indirect labor-to three activity cost pools-Processing,
Supervising, and Other-based on resource consumption. Data to perform these
allocations appear below:
In the second stage, Processing costs are assigned to products using machine-hours
(MHs) and Supervising costs are assigned to products using the number of batches. The
costs in the Other activity cost pool are not assigned to products. Activity data for the
company’s two products follow:
Finally, sales and direct cost data are combined with Processing and Supervising costs
to determine product margins.
What is the product margin for Product U4 under activity-based costing?
A.-$3,500
B.$3,320
C.$6,500
D.$5,180
4) Which of the intermediate products should be processed further?
A.Cane fiber should NOT be processed into industrial fiber; Cane juice should be
processed into molasses
B.Cane fiber should NOT be processed into industrial fiber; Cane juice should NOT be
processed into molasses
C.Cane fiber should be processed into industrial fiber; Cane juice should NOT be
processed into molasses
D.Cane fiber should be processed into industrial fiber; Cane juice should be processed
into molasses
5) Farnsworth Television makes and sells portable television sets. Each television
regularly sells for $200. The following cost data per television are based on a full
capacity of 12,000 televisions produced each period:
A special order has been received by Farnsworth for a sale of 2,500 televisions to an
overseas customer. The only selling costs that would be incurred on this order would be
$10 per television for shipping. Farnsworth is now selling 7,200 televisions through
regular distributors each period. What should be the minimum selling price per
television in negotiating a price for this special order?
A.$200
B.$166
C.$178
D.$176
6) Sperazza Corporation produces large commercial doors for warehouses and other
facilities. In the most recent month, the company budgeted production of 4,900 doors.
Actual production was 5,300 doors. According to standards, each door requires 6.4
machine-hours. The actual machine-hours for the month were 34,340 machine-hours.
The standard supplies cost is $3.10 per machine-hour. The actual supplies cost for the
month was $99,331. Supplies cost is an element of variable manufacturing overhead.
The variable overhead efficiency variance for supplies cost is:
A.$5,821 F
B.$5,821 U
C.$1,302 U
D.$1,302 F
7) The company’s net profit margin percentage for Year 2 is closest to:
A.3.9%
B.38.5%
C.2.5%
D.1.6%
8) The principal difference between variable costing and absorption costing centers on:
A.whether variable manufacturing costs should be included in product costs.
B.whether fixed manufacturing costs should be included in product costs.
C.whether fixed manufacturing costs and fixed selling and administrative costs should
be included in product costs.
D.whether selling and administrative costs should be included in product costs.
9) Roberts Corporation manufactures home cleaning products. One of the products,
Quickclean, requires 2 pounds of Material A and 5 pounds of Material B per unit
manufactured. Material A is purchased from the supplier for $0.30 per pound and
Material B is purchased for $0.50 per pound. The finished goods inventory on hand at
the end of each month should equal 4,000 units plus 25% of the next month’s sales. The
raw materials inventory on hand at the end of each month (for either Material A or
Material B) should equal 80% of the following month’s production needs.
The production budget calls for 26,000 units of Quickclean to be manufactured in June
and 32,000 units of Quickclean to be manufactured in July. On May 31 there will be
41,600 pounds of Material A and 104,000 pounds of Material B in inventory.
The number of pounds of Material B to be purchased during June would be:
A.128,000
B.130,000
C.154,000
D.160,000
10) The company’s price-earnings ratio for Year 2 is closest to:
A.19.00
B.12.53
C.7.46
D.1.52
11) Muzyka Corporation uses the FIFO method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
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.
The cost per equivalent unit for conversion costs for the first department for the month
is closest to:
A.$44.51
B.$50.00
C.$46.92
D.$46.74
12) The times interest earned for Year 2 is closest to:
A.6.40
B.9.16
C.14.51
D.10.16
13) Suppose the special order is for 6,000 haks this month and thus some regular sales
would have to be given up. If this offer is accepted by Molis, the company’s operating
income for the month will:
A) increase by $6,000
B) increase by $7,500
C) increase by $5,000
D) increase by $1,500
14) Swifton Corporation produces a single product. Last year, the company had net
operating income of $40,000 using variable costing. Beginning and ending inventories
were 22,000 and 27,000 units, respectively. If the fixed manufacturing overhead cost
was $3 per unit both last year and this year, what was the income using absorption
costing?
A.$15,000
B.$25,000
C.$40,000
D.$55,000