1) The number of warranty claims would be an example of the
A) financial perspective
B) customer perspective
C) learning and growth perspective
D) internal business perspective
2) Selected financial data for the Photocopies Division of Elizabeth’s Business
Machines is as follows:
What is the Photocopier Division’s capital turnover?
A) 3.3
B) 2.5
C) 19.4
D) 1.3
3) Bravo Company sells two products, green camouflage pants and orange camouflage
pants. Bravo predicts that it will sell 1,000 pairs of green pants and 1,500 pairs of
orange pants in the next period. The unit contribution margins for green pants and
orange pants are $8.00 and $7.50, respectively. What is the weighted-average unit
contribution margin?
A) $1.30
B) $7.70
C) $6.50
D) $38.50
4) In the equation y = $7.20x + $790,
A) $250,250 are the total variable costs
B) $250,250 are the total costs
C) $250,250 are the total fixed costs
D) $250,250 are the total overhead costs
5) Cedar Mills Incorporated has a predicted operating income of $72,000. Its total
variable expenses are $20,000 and its total fixed expenses are $32,000. It has a unit
contribution margin of $10. Cedar Mills’ breakeven sales in units is
A) 8,400
B) 10,400
C) 4,000
D) 12,400
6) The total volume of water use associated with the processes and products of a
business is
A) usage footprint
B) waste footprint
C) trash footprint
D) water footprint
7) Environmental sustainability is the primary concern of which of the following types
of organizations?
A) Large domestic corporations
B) Global service firms
C) Manufacturing firms
D) All organizations regardless of size, location, or sector
8) Pigeon Forges’ stakeholders require a 10% rate of return. The company currently has
an ROI of 37% and a capital turnover of 2.0 . What is Pigeon’s sales margin?
A) 74.3%
B) 5.0%
C) 18.5%
D) 20.0%
9) Nadal Company is debating the use of direct labor cost or direct labor hours as the
cost allocation base for allocating manufacturing overhead. The following information
is available for the most recent year:
If Nadal Company uses direct labor cost as the allocation base, what would the
predetermined manufacturing overhead rate be?
A) 80%
B) 70%
C) 75%
D) 86%
10) Which of the following is not included in the cash flow statement under the direct
method of cash flow?
A) Changes in accounts receivable
B) Changes in depreciation
C) Changes in accounts payable
D) Changes in interest expense
11) Average variable costs
A) remain the same as production decreases
B) remain the same as production increases
C) remain the same no matter if production increases or decreases
D) go down as production decreases
12) Process costing is most likely used in which of the following industries?
A) Pharmaceuticals
B) Health Care
C) Shipbuilding
D) Construction
13) Perry Moldings has the following estimated costs for the upcoming year:
The company estimates that 1,200 direct labor hours will be worked in the upcoming
year, while 2,000 machine hours will be used during the year. The predetermined
manufacturing overhead rate per machine hour is closest to
A) $52
B) $97
C) $14
D) $33
14) The formula to compute the debt ratio is
A) interest expense/income from operations
B) total liabilities/total assets
C) income from operations/interest expense
D) total assets/total liabilities
15) All of the following are part of a company’s value chain except
A) design
B) distribution
C) administration
D) marketing
16) “The comprehensive budget” is best described by which term below?
A) Operating budget
B) Sensitivity analysis
C) Responsibility center
D) Master budget
17) The McCumber Corporation data for the current year:
With respect to selling/general expenses, what would a horizontal analysis report?
A) The current ratio is 0.92
B) There was a 4.47% increase from prior to current year
C) There was a 4.28% decrease from prior to current year
D) Selling/general expenses are 7.74% of net sales revenue
18) What is one constraint placed on the information provided by a managerial
accounting system?
A) Generally Accepted Accounting Principles (GAAP)
B) SEC Regulations
C) Cost – Benefit
D) International Financial Reporting Standards (IFRS)
19) The ________ “measures how well the business keeps unit prices of direct materials
within standards.”
A) production volume variance
B) overhead flexible budget variance
C) price variance
D) quantity variance
20) Most companies use ________ when developing the budgets each year.
A) a top-down approach
B) zero-based budgets
C) slack-based budgets
D) participative budgeting
21) Color Wheel has 3,500 gallons of paint in WIP inventory, with 75% of materials
already added. The paint is 60% through the process. Assuming all conversion costs are
added evenly throughout the process, what are the equivalent units for conversion
costs?
A) 0
B) 525
C) 2,100
D) 2,625
22) A ________ company has the highest percentage of labor costs as compared to the
other types of companies
A) merchandising
B) service
C) manufacturing
D) All companies have a high percentage of labor costs
23) London Plastics sells a product for $15.00 per unit. The product requires $4.00 per
unit in variable costs to produce it. The company plans on selling 12,000 units of this
product. If the monthly fixed costs are $84,000, the company’s average fixed costs per
unit will be
A) $4.00 per unit
B) $7.00 per unit
C) $10.00 per unit
D) $11.00 per unit
24) Paper Clip Company sells office supplies. The following information summarizes
the company’s operating activities for the year:
What is operating income?
A) $154,500
B) $56,000
C) $42,000
D) $46,000
25) Here are selected data for Sunny Sky Corporation:
What is the ending work in process inventory balance?
A) $161,500
B) $170,250
C) $211,200
D) $229,950
26) Molding and sanding each unit of product would most likely be classified as a
________ cost.
A) unit-level
B) batch-level
C) product-level
D) facility-level
27) Pluto Incorporated provided the following information regarding its single product:
The regular selling price for the product is $80. The annual quantity of units produced
and sold is 40,000 units (the costs above relate to the 40,000 units production level).
The company has excess capacity and regular sales will not be affected by this special
order. There was no beginning inventory.
What would be the effect on operating income of accepting a special order for 3,500
units at a sale price of $55 per product?
A) Increase by $115,500
B) Increase by $269,500
C) Decrease by $115,500
D) Decrease by $269,500
28) Stanley’s Bicycles store buys bicycles on average for $600 and sells them on
average for $750. He pays a sales commission of 15% of sales revenue to his sales staff.
Stanley pays $1,400 a month rent for his store, and also pays $3,000 a month to his staff
in addition to the commissions. Stanley sold 120 bicycles in June. If Stanley prepares a
contribution margin income statement for the month of June, what would be his
contribution margin?
A) $4,500
B) $90,000
C) $85,500
D) $175,500
29) Alexander Industries, in Chicago, plans to take advantage of the winds blowing in
from Lake Michigan. Alexander is developing a project to install a wind turbine that
would generate electricity and reduce energy costs. The turbine would have an initial
cost of $500,000 and would provide a net cost savings of $57,000 per year. The turbine
will have a life of 25 years.
What is the payback period, in years, for the wind turbine?
A) 8.77 years
B) 9.08 years
C) 25 years
D) 28.75 years
30) On a traditional income statement, sales revenue less cost of goods sold equals
A) gross profit
B) contribution margin
C) operating income
D) operating expenses
31) Solid Oak Bureau Company uses job costing. Solid Oak Bureau Company has two
departments, Trimming and Finishing. Manufacturing overhead is allocated based on
direct labor cost in the Trimming Department and direct labor hours in the Finishing
Department. The following additional information is available:
Actual data for completed Job No. 650 is as follows:
What is the total manufacturing overhead cost for Job No. 650?
A) $72,500
B) $89,600
C) $59,731
D) $78,520
32) At Panther Company, materials are added at the beginning of the process and
conversion costs are added uniformly.
The total cost of units remaining in ending WIP inventory is closest to
A) $285,525
B) $241,650
C) $ 66,150
D) $257,884
33) To follow is selected information about The Boston Company for the current year
and prior year.
What is the current year’s cost of goods sold percentage (as would be found on a
vertical analysis of the income statement for the current year)?
A) 69.70%
B) 64.00%
C) -2.42%
D) 97.58%
34) Natcher Corporation collects 30% of a month’s sales in the month of sale, 55% in
the month following sale, and 10% in the second month following sale. The company
has found that 5% of their sales are uncollectible. Budgeted sales for the upcoming four
months are:
The amount of cash that will be collected in November is budgeted to be
A) $287,500
B) $283,000
C) $78,000
D) $291,500
35) Mighty Corporation manufactures end tables. Each end table requires .50 direct
labor hours in its production. Mighty Corporation has a direct labor rate of $15 per
direct labor hour. The production budget shows that Mighty Corporation plans to
produce 1,000 end tables in March and 1,100 end tables in April. What is the total
combined direct labor cost that should be budgeted for March and April?
A) 8,250
B) 7,500
C) 15,750
D) 31,500
36) The Muffin House produces and sells a variety of muffins. The selling price per
dozen is $15, variable costs are $9 per dozen, and total fixed costs are $4,200. How
many dozen muffins must The Muffin House sell to breakeven?
A) 10,500
B) 700
C) 280
D) 175
37) An accounting firm would be classified as a
A) manufacturing company
B) merchandising company
C) simple company
D) service company
38) Which of the following is TRUE about a statement of cash flows?
A) The statement of cash flows is one of the required financial statements for
publicly-held companies
B) The statement of cash flows is prepared at the option of management
C) The statement of cash flows may be combined with the income statement
D) The statement of cash flows does not have to be completed if an income statement is
prepared
39) Barbara’s Candles provides the following information about its single product.
How many units must be sold to earn the targeted operating income?
A) 1,375
B) 3,625
C) 2,250
D) 906
40) Another name for the minimum desired rate of return is
A) discount rate
B) required rate of return
C) hurdle rate
D) All of the above