1) Acklac Corporation uses the weighted-average method in its process costing system.
This month, the beginning inventory in the first processing department consisted of 700
units. The costs and percentage completion of these units in beginning inventory were:
A total of 9,200 units were started and 8,300 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 75% complete with respect to materials and 15% 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 of ending work in process inventory in the first processing department
according to the company’s cost system is closest to:
A.$33,273
B.$11,769
C.$78,462
D.$58,847
2) The net present value of the entire project is closest to:
A.$213,123
B.$198,963
C.$308,000
D.$320,010
3) The raw materials purchased during November totaled:
A.$42,000
B.$45,000
C.$36,000
D.$39,000
4) Zike Corporation’s static planning budget for October appears below. The company
bases its budgets on machine-hours.
In October, the actual number of machine-hours was 6,000, the actual supplies cost was
$14,740, the actual power cost was $49,170, the actual salaries cost was $15,390, and
the actual equipment depreciation was $63,670.
The spending variance for equipment depreciation in the flexible budget performance
report for the month should be:
A.$970 F
B.$970 U
C.$2,330 U
D.$2,330 F
5) Turner Co. presently has a current ratio of 0.8. The company has been informed by
its bank that it must improve its current ratio to qualify for a line of credit. Which of the
following actions would improve the current ratio?
A.Use cash to pay off some current liabilities.
B.Purchase additional marketable securities with cash.
C.Acquire a parcel of land in exchange for common stock.
D.Purchase additional inventory on credit.
6) A manufacturing company 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:
The variable overhead rate variance for the period was closest to:
A.$315 U
B.$1,465 F
C.$1,465 U
D.$315 F
7) Imrie Corporation makes a product that uses a material with the quantity standard of
9.5 grams per unit of output and the price standard of $5.00 per gram. In January the
company produced 2,900 units using 26,940 grams of the direct material. During the
month the company purchased 28,900 grams of the direct material at $4.90 per gram.
The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for January is:
A.$2,755 U
B.$2,890 F
C.$2,890 U
D.$2,755 F
8) Derf Corporation uses a standard cost system in which it applies manufacturing
overhead on the basis of standard direct labor-hours. Two direct labor-hours are
required for each unit produced. The denominator activity was set at 9,000 units.
Manufacturing overhead was budgeted at $135,000 for the period; 20 percent of this
cost was fixed. The 17,200 hours worked during the period resulted in production of
8,500 units. Variable manufacturing overhead cost incurred was $108,500 and fixed
manufacturing overhead cost was $28,000.
The variable overhead efficiency variance for the period was:
A.$5,300 Unfavorable
B.$1,200 Unfavorable
C.$1,500 Unfavorable
D.$6,500 Unfavorable
9) What would be the effect on the company’s overall net operating income if product
I11S were dropped?
A) Overall net operating income would decrease by $46,000.
B) Overall net operating income would increase by $93,000.
C) Overall net operating income would increase by $46,000.
D) Overall net operating income would decrease by $93,000.
10) When the weighted-average method of process costing is used, a department’s
equivalent units are computed by:
A.subtracting the equivalent units in beginning inventory from the equivalent units in
ending inventory.
B.subtracting the equivalent units in beginning inventory from the equivalent units for
work performed during the period.
C.adding the units transferred out to the equivalent units in ending inventory.
D.subtracting the equivalent units in beginning inventory from the sum of the units
transferred out and the equivalent units in ending inventory.
11) The following data have been provided by Graise Corporation from its
activity-based costing accounting system:
Distribution of Resource Consumption across Activity Cost Pools:
The “Other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products.
How much factory supervision and indirect factory labor cost would NOT be assigned
to products using the activity-based costing system?
A.$0
B.$62,000
C.$160,000
D.$300,000
12) The Claus Corporation makes and sells a single product and uses standard costing.
During January, the company actually used 8,700 direct labor-hours (DLHs) and
produced 3,000 units of product. The standard cost card for one unit of product includes
the following:
Variable factory overhead: 3.0 DLHs @ $4.00 per DLH.
Fixed factory overhead: 3.0 DLHs @ $3.50 per DLH.
For January, the company incurred $22,000 of actual fixed manufacturing overhead
costs and recorded a $875 favorable volume variance.
The fixed manufacturing overhead cost used to compute the predetermined overhead
rate was:
A.$31,500
B.$30,625
C.$32,375
D.$33,250
13) If direct labor-hours is the company’s production constraint, then the ranking of the
products from the most profitable to the least profitable use of the constrained resource
is:
A) A, B, C
B) B, C, A
C) C, A. B
D) A, C, B
14) The predetermined overhead rate is closest to:
A.$36.60
B.$36.41
C.$36.24
D.$36.05
15) Which of the following costs is classified as a prime cost?
Direct materials Indirect materials
A) Yes Yes
B) No No
C) Yes No
D) No Yes
16) Last year Truro Corporation purchased $800,000 of inventory. The cost of goods
sold was $750,000 and the ending inventory was $125,000. The inventory turnover for
the year was:
A.6.0
B.7.5
C.6.4
D.8.0
17) Grosvenor Corporation’s most recent income statement appears below:
The gross margin percentage is closest to:
A.80.9%
B.44.7%
C.376.0%
D.26.6%