1) kimbeth manufacturing makes dust density sensors (dds), a safety device for the
mining industry. the company uses a process costing system and has only a single
processing department. the following information pertains to operations for the month
of may:
the beginning work in process inventory was 60% complete with respect to materials
and 20% complete with respect to conversion costs. the ending work in process
inventory was 90% complete with respect to materials and 40% complete with respect
to conversion costs. the costs were as follows:
using the fifo method, the cost per equivalent unit of conversion cost for may is closest
to:
a.$5.65
b.$5.83
c.$6.00
d.$6.20
2) the margin of safety is equal to:
a.sales – net operating income
b.sales – (variable expenses/contribution margin)
c.sales – (fixed expenses/contribution margin ratio)
d.sales – (variable expenses + fixed expenses)
3) zellner corporation is developing direct labor standards. a particular product requires
0.94 direct labor-hours per unit. the allowance for breaks and personal needs is 0.02
direct labor-hours per unit. the allowance for cleanup, machine downtime, and rejects is
0.10 direct labor-hours per unit. the standard direct labor-hours per unit should be:
a.0.82
b.0.92
c.0.94
d.1.06
4) charrd corporation manufactures a gas operated barbecue grill. the following
information relates to charrd’s operations for last year:
what is charrd’s variable costing unit product cost?
a.$29
b.$34
c.$58
d.$63
5) roberts enterprises has budgeted sales in units for the next five months as follows:
past experience has shown that the ending inventory for each month must be equal to
10% of the next month’s sales in units. the inventory on may 31 contained 410 units. the
company needs to prepare a production budget for the second quarter of the year.
the total number of units produced in july should be:
a.6,500 units
b.5,600 units
c.5,660 units
d.5,540 units
6) porus corporation makes and sells a single product called a yute. the company is in
the process of preparing its selling and administrative expense budget for the last
quarter of the year. the following budget data are available:
all of these expenses (except depreciation) are paid in cash in the month they are
incurred.
if the company has budgeted to sell 19,000 yutes in november, then the total budgeted
selling and administrative expenses for november would be:
a.$529,100
b.$189,000
c.$340,100
d.$528,100
7) mccaughey corporation’s most recent balance sheet and income statement appear
below:
the working capital at the end of year 2 is:
a.$80 thousand
b.$740 thousand
c.$780 thousand
d.$340 thousand
8) which of the following would be classified as a prevention cost on a quality cost
report?
a.cost of field servicing and handling complaints
b.quality engineering
c.lost sales arising from a reputation for poor quality
d.supervision of testing and inspection activities
9) wintersmith corporation estimates that its variable manufacturing overhead is $11.60
per machine-hour and its fixed manufacturing overhead is $278,124 per period.
if the denominator level of activity is 4,200 machine-hours, the variable element in the
predetermined overhead rate would be:
a.$11.60
b.$66.22
c.$76.28
d.$77.82
10) roberts enterprises has budgeted sales in units for the next five months as follows:
past experience has shown that the ending inventory for each month must be equal to
10% of the next month’s sales in units. the inventory on may 31 contained 410 units. the
company needs to prepare a production budget for the second quarter of the year.
the desired ending inventory for august is:
a.530 units
b.670 units
c.710 units
d.370 units
11) given the cost formula y = $17,500 + $4x, at what level of activity will total cost be
$42,500?
a.10,625 units
b.4,375 units
c.6,250 units
d.5,250 units
12) guynn corporation’s most recent balance sheet and income statement appear below:
dividends on common stock during year 2 totaled $10 thousand. dividends on preferred
stock totaled $5 thousand. the market price of common stock at the end of year 2 was
$7.05 per share.
the price-earnings ratio for year 2 is closest to:
a.12.82
b.8.92
c.6.18
d.14.10
13) the standards for product v33i specify 8.0 direct labor-hours per unit at $11.20 per
direct labor-hour. last month 760 units of product v33i were produced using 6,500
direct labor-hours at a total direct labor wage cost of $75,075.
required:
a. what was the labor rate variance for the month?
b. what was the labor efficiency variance for the month?
c. prepare a journal entry to record direct labor costs during the month, including the
direct labor variances.
14) the management of trachte corporation is reviewing its policies concerning
compensation of salespersons. the company has four products that use the same
constrained resource. data concerning those products appear below:
the company does not have enough of the constrained resource to satisfy for demand of
all four products.
required:
a. if salespersons are paid commissions that are a set percentage of sales, which product
would they prefer to sell? in other words, if it is a choice between selling one unit of
one product and one unit of another, which product would they prefer to sell?
b. from the standpoint of the entire company, if it is a choice between sales of one unit
of one product versus another, which product should the salespersons emphasize?
15) moorhouse clinic uses client-visits as its measure of activity. during december, the
clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,690
client-visits. the clinic has provided the following data concerning the formulas used in
its budgeting and its actual results for december:
the personnel expenses in the planning budget for december would be closest to:
a.$51,009
b.$51,147
c.$53,370
d.$53,299
16) toma nuptial bakery makes very elaborate wedding cakes to order. the company has
an activity-based costing system with three activity cost pools. the activity rate for the
size-related activity cost pool is $1.14 per guest. (the greater the number of guests, the
larger the cake.) the activity rate for the complexity-related cost pool is $31.86 per tier.
(cakes with more tiers are more complex.) finally, the activity rate for the order-related
activity cost pool is $59.66 per order. (each wedding involves one order for a cake.) the
activity rates include the costs of raw ingredients such as flour, sugar, eggs, and
shortening. the activity rates do not include the costs of purchased decorations such as
miniature statues and wedding bells, which are accounted for separately.
data concerning two recent orders appear below:
assuming that all of the costs listed above are avoidable costs in the event that an order
is turned down, what amount would the company have to charge for the zedian wedding
cake to just break even?
a.$247.60
b.$18.55
c.$59.66
d.$204.63
