1) data concerning grodi corporation’s single product appear below:
fixed expenses are $324,000 per month. the company is currently selling 5,000 units per
month. management is considering using a new component that would increase the unit
variable cost by $9. since the new component would increase the features of the
company’s product, the marketing manager predicts that monthly sales would increase
by 500 units. what should be the overall effect on the company’s monthly net operating
income of this change?
a.decrease of $4,500
b.decrease of $40,500
c.increase of $40,500
d.increase of $4,500
2) on july 1, woolard corporation had $20,000 of raw materials on hand. during the
month, the company purchased an additional $53,000 of raw materials. during july,
$49,000 of raw materials were requisitioned from the storeroom for use in production.
these raw materials included both direct and indirect materials. the indirect materials
totaled $5,000.
prepare journal entries to record these events.
the debits to the manufacturing overhead account as a consequence of the raw materials
transactions in july total:
a.$44,000
b.$5,000
c.$0
d.$49,000
3) dilom farm supply is located in a small town in the rural west. data regarding the
store’s operations follow:
sales are budgeted at $260,000 for november, $230,000 for december, and $210,000 for
january.
collections are expected to be 55% in the month of sale, 40% in the month following
the sale, and 5% uncollectible.
the cost of goods sold is 80% of sales.
the company purchases 50% of its merchandise in the month prior to the month of sale
and 50% in the month of sale. payment for merchandise is made in the month following
the purchase.
other monthly expenses to be paid in cash are $21,700.
monthly depreciation is $17,000.
ignore taxes.
the accounts receivable balance, net of uncollectible accounts, at the end of december
would be:
a.$89,500
b.$92,000
c.$103,500
d.$196,000
4) (ignore income taxes in this problem.) isomer industrial training corporation is
considering the purchase of new presentation equipment at a cost of $150,000. the
equipment has an estimated useful life of 10 years with an expected salvage value of
zero. the equipment is expected to generate net cash inflows of $35,000 per year in each
of the 10 years. isomer’s discount rate is 16%. isomer uses the straight-line method of
depreciation for its assets.
between what two percents does the internal rate of return of the presentation
equipment fall?
a.5% and 6%
b.8% and 10%
c.14% and 16%
d.18% and 20%
5) wolle corporation estimates that its variable manufacturing overhead is $11.60 per
machine-hour and its fixed manufacturing overhead is $298,936 per period.
if the denominator level of activity is 4,300 machine-hours, the fixed element in the
predetermined overhead rate would be:
a.$81.12
b.$11.60
c.$69.52
d.$1,160.00
6) mzimba sofa company has developed the following manufacturing overhead
standards for its sofa production.
manufacturing overhead at mzimba is applied to production on the basis of standard
machine-hours. the above standards were based on an expected annual volume of
20,000 sofas. the actual results last year were as follows:
what was mzimba’s variable overhead rate variance?
a.$8,514 favorable
b.$8,766 unfavorable
c.$17,280 unfavorable
d.$54,846 unfavorable
7) lisa inc.’s balance sheet appears below:
the company’s sales for the year were $300 thousand, its cost of goods sold was $220
thousand, and its net income was $35 thousand. all sales were on credit. preferred
dividends for the year were $5 thousand.
lisa inc.’s return on common stockholders’ equity for year 2 was closest to:
a.7.8%
b.10.6%
c.10.9%
d.12.4%
8) gallager company, which has only one product, has provided the following data
concerning its most recent month of operations:
the total contribution margin for the month under the variable costing approach is:
a.$303,600
b.$132,000
c.$356,400
d.$72,400
9) the cash budget must be prepared before you can complete the:
a.production budget
b.budgeted balance sheet
c.raw materials purchases budget
d.schedule of cash disbursements
10) weise corporation produces and sells two products. data concerning those products
for the most recent month appear below:
fixed expenses for the entire company were $38,200.
if the sales mix were to shift toward product u69i with total sales remaining constant,
the overall break-even point for the entire company:
a.would increase.
b.would not change.
c.would decrease.
d.could increase or decrease.