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1) lauser clinic uses client-visits as its measure of activity. during july, 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 july:
the occupancy expenses in the flexible budget for july would be closest to:
a.$12,466
b.$12,991
c.$12,921
d.$12,480
2) nodine fabrication corporation has a standard cost system in which it applies
manufacturing overhead to products on the basis of standard machine-hours (mhs). the
company's cost formula for variable overhead is $7.50 per mh. the company had
budgeted its fixed manufacturing overhead cost at $48,000 for the month. during the
month, the actual total variable overhead was $59,760 and the actual total fixed
manufacturing overhead was $45,000. the actual level of activity for the period was
8,300 mhs. what was the total of the variable overhead rate and fixed manufacturing
overhead budget variances for the month?
a.$2,490 favorable
b.$5,490 favorable
c.$5,490 unfavorable
d.$2,490 unfavorable
3) aybar international corporation's only product sells for $210.00 per unit and its
variable expense is $75.60. the company's monthly fixed expense is $766,080 per
month. the unit sales to attain the company's monthly target profit of $28,000 is closest
to:
a.5,908
b.6,731
c.10,504
d.3,781
4) a manufacturing company that produces a single product has provided the following
data concerning its most recent month of operations:
what is the net operating income for the month under absorption costing?
a.$(15,900)
b.$19,200
c.$10,200
d.$9,000
5) moulgadi corporation uses the fifo method in its process costing system. data
concerning the first processing department for the most recent month are listed below:
note: your answers may differ from those offered below due to rounding error. in all
cases, select the answer that is the closest to the answer you computed. to reduce
rounding error, carry out all computations to at least three decimal places.
the total cost transferred from the first processing department to the next processing
department during the month is closest to:
a.$526,967
b.$583,000
c.$620,901
d.$567,500
6) which of the following costs at a manufacturing company would be treated as a
product cost under the absorption costing method?
a.sales commissions
b.fire insurance cost on factory building
c.advertising costs
d.all of these
7) castil corporation makes and sells a product called a miniwarp. one miniwarp
requires 2.5 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 20% of
the following month's production needs. on july 31, this requirement was not met since
only 9,700 kilograms of jurislon were on hand. the cost of jurislon is $5.00 per
kilogram. the company wants to prepare a direct materials purchase budget for the next
five months.
the desired ending inventory of jurislon for the month of september is:
a.$20,900
b.$52,000
c.$52,250
d.$20,800
8) ahina industries is a division of a major corporation. data concerning the most recent
year appears below:
the division's return on investment (roi) is closest to:
a.21.1%
b.2.5%
c.26.7%
d.7.0%
9) moulgadi corporation uses the fifo method in its process costing system. data
concerning the first processing department for the most recent month are listed below:
note: your answers may differ from those offered below due to rounding error. in all
cases, select the answer that is the closest to the answer you computed. to reduce
rounding error, carry out all computations to at least three decimal places.
the cost of ending work in process inventory in the first processing department
according to the company's cost system is closest to:
a.$95,523
b.$56,031
c.$52,538
d.$62,090
10) luc corporation manufactures and sells a single product. the company uses units as
the measure of activity in its budgets and performance reports. during february, the
company budgeted for 5,000 units, but its actual level of activity was 4,950 units. the
company has provided the following data concerning the formulas used in its budgeting
and its actual results for february:
the activity variance for direct labor in february would be closest to:
a.$340 u
b.$760 f
c.$340 f
d.$760 u
11) the adams company, a merchandising firm, has budgeted its activity for november
according to the following information:
sales at $450,000, all for cash
merchandise inventory on october 31 was $200,000.
the cash balance november 1 was $18,000.
selling and administrative expenses are budgeted at $60,000 for november and are paid
for in cash.
budgeted depreciation for november is $25,000.
the planned merchandise inventory on november 30 is $230,000.
the cost of goods sold is 70% of the selling price.
all purchases are paid for in cash.
the budgeted net income for november is:
a.$50,000
b.$68,000
c.$75,000
d.$135,000
12) rackett corporation is considering two alternatives that are code-named m and n.
costs associated with the alternatives are listed below:
required:
a. which costs are relevant and which are not relevant in the choice between these two
alternatives?
b. what is the differential cost between the two alternatives?
13) shelzo inc., a manufacturer of construction equipment is considering the purchase
of one of its suppliers, raritron industries. the purchase has been given preliminary
approval by shelzo's board of directors, and several discussions have taken place
between the management of both companies. raritron has submitted financial data for
the past several years. shelzo's controller has analyzed raritron's financial statements
and prepared the following ratio analysis comparing raritron's performance with the
industry averages.
required:
using the information provided above for raritron industries:
a. 1. identify the two ratios from the above list that would be of most interest to
short-term creditors.
explain what these two ratios measure.
what do these two ratios indicate about shelzo inc.?
b. 1. identify the three ratios from the above list that would be of most interest to
stockholders.
explain what these three ratios measure.
what do these three ratios indicate about shelzo inc.?
c. 1. identify the two ratios from the above list that would be of most interest to
long-term creditors.
explain what these two ratios measure.
what do these two ratios indicate about shelzo inc.?
