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1) A cement manufacturer has supplied the following data:
The company's contribution margin ratio is closest to:
A.40.0%
B.50.0%
C.60.0%
D.10.7%
2) Akey Hospital bases its budgets on patient-visits. The hospital's static budget for
March appears below:
The total overhead cost at an activity level of 3,000 patient-visits per month should be:
A.$97,800
B.$92,100
C.$88,020
D.$92,640
3) Studler Corporation has an activity-based costing system with three activity cost
pools-Processing, Supervising, and Other. In the first stage allocations, costs in the two
overhead accounts, equipment expense and indirect labor, are allocated to the three
activity cost pools based on resource consumption. Data used in the first stage
allocations follow:
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:
The activity rate for the Supervising activity cost pool under activity-based costing is
closest to:
A.$2.50 per batch
B.$2.63 per batch
C.$9.55 per batch
D.$44.00 per batch
4) The working capital at the end of Year 2 is:
A.$850
B.$770
C.$400
D.$80
5) Hacken Company has a job-order costing system. The company applies
manufacturing overhead to jobs using a predetermined overhead rate based on direct
labor cost. The information below has been taken from the cost records of Hacken
Company for the past year:
Required:
a. Compute the cost of direct materials purchased during the year.
b. Compute the predetermined overhead rate that was used during the past year.
c. Compute the Cost of Goods Manufactured for the past year.
d. Compute the unadjusted Cost of Goods Sold for the past year.
6) The manufacturing overhead was:
A.$1,900 underapplied
B.$700 underapplied
C.$400 overapplied
D.$3,200 overapplied
7) The July contribution format income statement of Raiche Corporation appears
below:
If the company's sales increase by 5%, its net operating income should increase by
about:
A.34%
B.67%
C.5%
D.7%
8) Gierlach Beet Processors, Inc., processes sugar beets in batches. A batch of sugar
beets costs $27 to buy from farmers and $17 to crush in the company's plant. Two
intermediate products, beet fiber and beet juice, emerge from the crushing process. The
beet fiber can be sold as is for $27 or processed further for $14 to make the end product
industrial fiber that is sold for $34. The beet juice can be sold as is for $32 or processed
further for $29 to make the end product refined sugar that is sold for $58. How much
more profit (loss) does the company make by processing the intermediate product beet
juice into refined sugar rather than selling it as is?
A.$(47)
B.$(20)
C.$(3)
D.$(25)
9) Hettich Corporation uses an activity-based costing system with the following three
activity cost pools:
The Other activity cost pool is used to accumulate costs of idle capacity and
organization-sustaining costs.
The company has provided the following data concerning its costs:
The distribution of resource consumption across activity cost pools is given below:
The activity rate for the Order Processing activity cost pool is closest to:
A.$1,400 per order
B.$1,600 per order
C.$1,150 per order
D.$800 per order
10) The net present value of the entire project is closest to:
A.$224,000
B.$394,614
C.$236,640
D.$154,614
11) Trainor Corporation uses activity-based costing to assign overhead costs to
products. Overhead costs have already been allocated to the company's three activity
cost pools as follows: Processing, $29,200; Supervising, $13,000; and Other, $26,800.
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 appear below:
The activity rate for the Supervising activity cost pool under activity-based costing is
closest to:
A.$13.00 per batch
B.$69.00 per batch
C.$8.00 per batch
D.$11.43 per batch
12) Teich Inc. is considering whether to continue to make a component or to buy it from
an outside supplier. The company uses 15,000 of the components each year. The unit
product cost of the component according to the company's absorption cost accounting
system is given as follows:
Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 10%
is avoidable if the component were bought from the outside supplier; the remainder is
not avoidable. In addition, making the component uses 3 minutes on the machine that is
the company's current constraint. If the component were bought, time would be freed up
for use on another product that requires 6 minutes on this machine and that has a
contribution margin of $8.10 per unit.
When deciding whether to make or buy the component, what cost of making the
component should be compared to the price of buying the component?
A.$15.55 per unit
B.$11.50 per unit
C.$19.15 per unit
D.$15.10 per unit
13) Berends Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in April.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The labor efficiency variance for April is:
A.$1,232 F
B.$1,360 F
C.$1,360 U
D.$1,232 U
14) Consider the following three conditions:
I. An increase in sales
II. An increase in operating assets
III. A reduction in expenses
Which of the above conditions provide a way in which a manager can improve return
on investment?
A.Only I
B.Only I and II
C.Only I and III
D.Only II and III
