1) Which of the following cost of quality categories represent the cost incurred to
provide “warranty repair on a juicer?”
A) Prevention costs
B) Appraisal costs
C) External failure costs
D) Internal failure costs
2) Sydney’s Barbecue manufactures barbecue equipment for consumers and businesses
in the marketplace. The managerial accountant at Sydney’s Barbecue reported the
following data:
What is the average manufacturing cost per unit at Sydney’s Barbecue? (Round your
answer)
A) $58
B) $68
C) $75
D) $85
E) $95
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 debt ratio for the current year?
A) 1.98
B) .53
C) 2.43%
D) .44
4) Mr. Lite is an entrepreneur that builds and manages organic vegetables in the United
States. Mr. Lite recently developed a sustainability strategy to build a large greenhouse
and warehouse in a recessed area in North Carolina. The greenhouse is expected to
produce organic vegetables and Mr. Lite can sell the organic vegetables to the state to
feed homeless people at the local community centers in the state. This project is
expected to generate a minimum of 100 full-time employees. The cost to build the new
greenhouse is $10,000,000 and the food that is produced at the greenhouse is expected
to generate $1,500,000 in payments from the state.
Compute the payback period, in years. Should Mr. Lite build the new greenhouse? Is
the strategy to build the new greenhouse an effective sustainability strategy? Why or
why not?
5) Prince Paper has budgeted the following amounts for its next fiscal year:
If Price Paper spends an additional $12,500 on advertising, sales volume should
increase by 2,300 units. What effect will this have on operating income?
A) Increase of $102,500
B) Increase of $115,000
C) Decrease of $115,000
D) Decrease of $102,500
6) The Hummel 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 $28,000 of the current year’s current assets.
Average inventory for the current year is $12,000.
Average net accounts receivable for the current year is $32,000.
There are 40,000 shares of common stock outstanding.
Total dividends paid during the current year were $60,000.
The market price per share of common stock is $25.
What is the company’s rate of return on total assets for the current year?
A) 28%
B) 32%
C) 0.35%
D) 22.86%
7) The following information relates to Woolf Unlimited for the past two years.
What is days’ sales in receivables for the current year?
A) 56.78 days
B) 69.20 days
C) 43.08 days
D) 10.00 days
8) A company uses the indirect method to prepare the statement of cash flows. It
presents the following data on its financial statements:
*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts receivable?
A) The increase of $15,000 will be subtracted from sales revenue.
B) The increase of $15,000 will be added to net income.
C) The increase of $15,000 will be subtracted from net income.
D) The increase of $15,000 will be added to sales revenue.
9) Under the direct method of cash flow, which of the following is not included in the
statement of cash flows?
A) Changes in accounts payable
B) Changes in accounts receivable
C) Changes in depreciation
D) Changes in inventory
10) The following information relates to Truman Unlimited for the past two years.
The price-earnings ratio for the current year is
A) 13.33.
B) 1.97.
C) 9.60.
D) 13.50.
11) The ________ “tells managers how much of the total direct materials variance is
due to using more or less materials than anticipated the by standards.”
A) production volume variance
B) overhead flexible budget variance
C) price variance
D) quantity variance
12) Sophia’s Delivery Service charges a $55 service fee. The variable cost per service
run is $22. The company’s fixed expenses amount to $6,200. If the operating income
equals fixed expenses, what is the breakeven point in sales revenue for Sophia’s
Delivery Service?
A) $10,285
B) $4,140
C) $6,200
D) $10,340
13) Weissfeld Corporation manufactures a single product. The direct materials standard
calls for 5 pounds of direct material per unit. The standard for direct material cost per
pound is $10. A computer error has wiped out the records for the direct labor standards
but the following information is found for the month of October:
Required:
a.Calculate the number of pounds of direct materials purchased and used during
October.
b.Calculate the materials quantity variance.
c.Calculate the standard direct labor rate per hour.
d.Calculate the standard direct labor hours allowed for October’s production.
14) 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 earnings per share for the current year?
A) $5.12
B) $4.94
C) $4.05
D) $11.86
15) 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) 66.79%
D) 41.69%
16) Taylor Company reported the following information for the current year:
What would a vertical analysis report with respect to current year income tax expense?
A) A decrease of $24,768
B) A decrease of 144.80% from prior to current year
C) Income tax expense is 2.00% of net sales revenue
D) A decrease of $4,344