1) data concerning sotero corporation’s single product appear below:
the company is currently selling 5,000 units per month. fixed expenses are $319,000 per
month. consider each of the following questions independently.
this question is to be considered independently of all other questions relating to sotero
corporation. refer to the original data when answering this question.
management is considering using a new component that would increase the unit
variable cost by $8. since the new component would increase the features of the
company’s product, the marketing manager predicts that monthly sales would increase
by 500 units. what should be the overall effect on the company’s monthly net operating
income of this change?
a.increase of $2,000
b.decrease of $2,000
c.increase of $38,000
d.decrease of $38,000
2) deleston boat wash’s cost formula for its cleaning equipment and supplies is $2,150
per month plus $21 per boat. for the month of september, the company planned for
activity of 79 boats, but the actual level of activity was 39 boats. the actual cleaning
equipment and supplies for the month was $3,110.
the cleaning equipment and supplies in the flexible budget for september would be
closest to:
a.$1,880
b.$3,110
c.$3,809
d.$2,969
3) hart company’s labor standards call for 500 direct labor-hours to produce 250 units of
product. during october the company worked 625 direct labor-hours and produced 300
units. the standard hours allowed for october would be:
a.625 hours
b.500 hours
c.600 hours
d.250 hours
4) wakeman products inc. makes two productsw28h and z28d. product w28h’s selling
price is $27.00 and its unit variable cost is $21.60. product z28d’s selling price is
$170.00 and its unit variable cost is $153.00. the monthly demand is 2,030 units for
product w28h and 730 units for z28d. the constrained resource is a particular machine
that is available for 9,500 minutes each month. each unit of product w28h requires 3
minutes on this machine and each unit of product z28d requires 10 minutes on this
machine.
how many units of product z28d should be produced each month?
a.341
b.730
c.0
d.1,339
5) drabant kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. during february, the kennel budgeted
for 2,000 tenant-days, but its actual level of activity was 2,040 tenant-days. the kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for february:
the spending variance for expendables in february would be closest to:
a.$836 f
b.$1,360 f
c.$836 u
d.$1,360 u
6) the management of cerruto corporation has provided the following data concerning
its two products:
the constrained resource is a particular machine that is available for 9,600 minutes each
month.
what is the maximum contribution margin the company can earn per month?
a.$144,270
b.$114,045
c.$107,781
d.$101,370
7) look manufacturing corporation has a traditional costing system in which it applies
manufacturing overhead to its products using a predetermined overhead rate based on
direct labor-hours (dlhs). the company has two products, n06d and m09k, about which it
has provided the following data:
the company’s estimated total manufacturing overhead for the year is $2,532,200 and
the company’s estimated total direct labor-hours for the year is 44,000.
the company is considering using a variation of activity-based costing to determine its
unit product costs for external reports. data for this proposed activity-based costing
system appear below:
the unit product cost of product n40s under the activity-based costing system is closest
to:
a.$68.00
b.$68.86
c.$124.68
d.$136.86
8) the management of thews corporation is considering dropping product e28i. data
from the company’s accounting system appear below:
all fixed expenses of the company are fully allocated to products in the company’s
accounting system. further investigation has revealed that $86,000 of the fixed
manufacturing expenses and $67,000 of the fixed selling and administrative expenses
are avoidable if product e28i is discontinued.
required:
a. what is the net operating income earned by product e28i according to the company’s
accounting system? show your work!
b. what would be the effect on the company’s overall net operating income of dropping
product e28i? should the product be dropped? show your work!
9) data from waisner corporation’s most recent balance sheet and income statement
appear below:
the average sale period for this year is closest to:
a.134.7 days
b.15.2 days
c.14.0 days
d.137.7 days
10) on april 1, bachler corporation had $37,000 of raw materials on hand. during the
month, the company purchased an additional $75,000 of raw materials. during april,
$88,000 of raw materials were requisitioned from the storeroom for use in production.
these raw materials included both direct and indirect materials. the indirect materials
totaled $6,000.
the journal entry to record the requisition from the storeroom would include a:
a.credit to manufacturing overhead of $6,000
b.debit to raw materials of $88,000
c.debit to work in process of $82,000
d.debit to work in process of $88,000