1) Coderre Corporation manufactures and sells a single product. The company uses
units as the measure of activity in its budgets and performance reports. During July, the
company budgeted for 7,800 units, but its actual level of activity was 7,780 units. The
company has provided the following data concerning the formulas used in its budgeting
and its actual results for July:
Data used in budgeting:
Actual results for July:
The direct materials in the flexible budget for July would be closest to:
A.$69,242
B.$69,490
C.$69,420
D.$69,134
2) The standard cost card for a product indicates that one unit of the product requires 8
kilograms of a raw material at $0.80 per kilogram. The production of the product in
April was 870 units, but production had been budgeted for 850 units. During April,
8,200 kilograms of the raw material were purchased for $6,888 and 7,150 kilograms of
the raw material were used in production. The material variances for April were:
A.Option A
B.Option B
C.Option C
D.Option D
3) A tile manufacturer has supplied the following data:
If the company increases its unit sales volume by 5% without increasing its fixed
expenses, then total net operating income should be closest to:
A.$6,600
B.$184,200
C.$134,422
D.$138,600
4) Abbe Corporation uses activity-based costing. The company makes two products:
Product A and Product B. The annual production and sales of Product A is 800 units and
of Product B is 600 units. There are three activity cost pools, with total cost and activity
as follows:
The cost per unit of Product B is closest to:
A.$25.90
B.$11.49
C.$34.73
D.$48.09
5) A company that produces a single product had a net operating income of $75,000
using variable costing and a net operating income of $95,000 using absorption costing.
Total fixed manufacturing overhead was $50,000 and production was 10,000 units both
this year and last year. Last year was the first year of operations. Between the beginning
and the end of the year, the inventory level:
A.decreased by 20,000 units
B.increased by 20,000 units
C.decreased by 4,000 units
D.increased by 4,000 units
6) Holiday Chemical Corporation uses a standard cost system to collect costs related to
the production of its “bowling ball” fruitcakes. The direct labor standard for each
fruitcake is 1.25 hours at a standard cost of $11.00 per hour. During the month of
November, Holiday’s fruitcake production used 9,820 direct labor-hours at a total direct
labor cost of $106,547. This resulted in production of 8,500 fruitcakes for November.
What is Holiday’s labor efficiency variance for November?
A.$8,855 Favorable
B.$10,328 Favorable
C.$13,047 Unfavorable
D.$14,520 Unfavorable
7) The best estimate of the total contribution margin when 5,300 units are sold is:
A) $51,940
B) $469,050
C) $109,710
D) $398,560
8) Ebis Corporation uses the FIFO method in its process costing system. The first
processing department, the Welding Department, started the month with 13,000 units in
its beginning work in process inventory that were 10% complete with respect to
conversion costs. The conversion cost in this beginning work in process inventory was
$12,610. An additional 89,000 units were started into production during the month.
There were 22,000 units in the ending work in process inventory of the Welding
Department that were 30% complete with respect to conversion costs. A total of
$806,085 in conversion costs were incurred in the department during the month.
The cost per equivalent unit for conversion costs is closest to:
A.$8.026
B.$9.700
C.$9.057
D.$9.450
9) Glocker Company makes three products in a single facility. These products have the
following unit product costs:
Additional data concerning these products are listed below.
The mixing machines are potentially the constraint in the production facility. A total of
5,900 minutes are available per month on these machines.
Direct labor is a variable cost in this company.
Required:
a. How many minutes of mixing machine time would be required to satisfy demand for
all three products?
b. How much of each product should be produced to maximize net operating income?
(Round off to the nearest whole unit.)
c. Up to how much should the company be willing to pay for one additional hour of
mixing machine time if the company has made the best use of the existing mixing
machine capacity? (Round off to the nearest whole cent.)
10) The Fischer Corporation uses a standard costing system. The following data have
been assembled for December:
The standard hours allowed for December’s production is:
A.5,400 hours
B.5,600 hours
C.5,800 hours
D.6,000 hours
11) The applied manufacturing overhead for the year was closest to:
A.$208,283
B.$209,001
C.$209,898
D.$209,180
12) Trepan Corporation is contemplating the introduction of a new product. The
company has gathered the following information concerning the product:
The company uses the absorption costing approach to cost-plus pricing as described in
the text.
Required:
a. Compute the markup on absorption cost.
b. Compute the selling price.
c. If the price computed in “b” above is charged, and costs turn out as projected, can the
company be assured that no loss will be sustained on the new product? Explain.
13) Compound C65Z is used by Sinkey Corporation to make one of its products. The
standard cost of compound C65Z is $21.10 per ounce and the standard quantity is 2.0
ounces per unit of output. Data concerning the compound in the most recent month
appear below:
The raw material was purchased on account.
Required:
a. Record the purchase of the raw material in a journal entry.
b. Record the use of the raw material in production in a journal entry.
14) The management of Buff Sports Stadium believes that the number of sporting
events each month is an measure of activity for total clean-up cost. Shown below are
event figures and total clean up costs for the past four months:
Required:
a. Estimate Buff’s cost formula for monthly clean-up cost using the high-low method.
b. Estimate Buff’s cost formula for monthly clean-up cost using the least-squares
regression method.
15) In May, one of the processing departments at Stitzel Corporation had beginning
work in process inventory of $16,000 and ending work in process inventory of $27,000.
During the month, the cost of units transferred out from the department was $160,000.
In the department’s cost reconciliation report for May, the total cost to be accounted for
under the weighted-average method would be:
A.$358,000
B.$43,000
C.$374,000
D.$187,000
16) Kenrick Corporation uses activity-based costing to compute product margins. In the
first stage, the activity-based costing system allocates two overhead
accounts-equipment expense and indirect labor-to three activity cost pools-Processing,
Supervising, and Other-based on resource consumption. Data to perform these
allocations appear below:
In the second stage, 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:
Finally, sales and direct cost data are combined with Processing and Supervising costs
to determine product margins.
What is the overhead cost assigned to Product U4 under activity-based costing?
A.$1,320
B.$3,180
C.$10,000
D.$1,860
17) The times interest earned for Year 2 is closest to:
A.6.40
B.9.16
C.14.51
D.10.16
18) Cashan Corporation makes and sells a product called a Miniwarp. One Miniwarp
requires 1.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps
for the next five months is as follows:
The company wants to maintain monthly ending inventories of Jurislon equal to 30% of
the following month’s production needs. On July 31, this requirement was not met since
only 10,400 kilograms of Jurislon were on hand. The cost of Jurislon is $4.00 per
kilogram. The company wants to prepare a Direct Materials Purchase Budget for the
next five months.
The desired ending inventory of Jurislon for September is:
A.$29,640
B.$29,520
C.$44,460
D.$44,280