1) dolney corporation has provided the following data for a recent period:
the variable overhead rate variance for lubricants is closest to:
a.$3,820 u
b.$600 f
c.$3,820 f
d.$4,420 f
2) which of the following would be classified as an external failure cost on a quality
cost report?
a.quality training
b.liability arising from defective products
c.test and inspection of incoming materials
d.quality engineering
3) excerpts from shelton corporation’s most recent balance sheet appear below:
sales on account in year 2 amounted to $1,320 and the cost of goods sold was $890.
the average sale period for year 2 is closest to:
a.246.1 days
b.49.2 days
c.55.4 days
d.33.2 days
4) the management of sharrar corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the
estimated amount of activity for the year. the company’s controller has provided an
example to illustrate how this new system would work. in this example, the allocation
base is machine-hours and the estimated amount of the allocation base for the upcoming
year is 45,000 machine-hours. in addition, capacity is 52,000 machine-hours and the
actual activity for the year is 47,100 machine-hours. all of the manufacturing overhead
is fixed and is $1,029,600 per year. for simplicity, it is assumed that this is the estimated
manufacturing overhead for the year as well as the manufacturing overhead at capacity
and the actual amount of manufacturing overhead for the year.
required:
a. determine the predetermined overhead rate if the predetermined overhead rate is
based on the estimated amount of the allocation base.
b. determine the underapplied or overapplied overhead for the year if the predetermined
overhead rate is based on the estimated amount of the allocation base.
c. determine the predetermined overhead rate if the predetermined overhead rate is
based on the amount of the allocation base at capacity.
d. determine the underapplied or overapplied overhead for the year if the predetermined
overhead rate is based on the amount of the allocation base at capacity.
5) in december, perone inc. incurred $78,000 of direct labor costs and $4,000 of indirect
labor costs. the journal entry to record the accrual of these wages would include a:
a.debit to work in process of $82,000
b.debit to manufacturing overhead of $4,000
c.credit to work in process of $82,000
d.credit to manufacturing overhead of $4,000
6) ryce corporation is about to announce a new product, c72, whose variable cost is
$118.70 per unit and that would require 9.40 grams of a raw material that is the
constrained resource in the company. the opportunity cost to use this constrained
resource is $60.00 per gram. what is the minimum acceptable selling price for the new
product?
a.$564.00
b.$178.70
c.$682.70
d.$118.70
7) manchester corporation would like to determine the relative profitability of the
company’s products for purposes of making volume trade-off decisions. for example,
the selling price of product g94t is $304.00 and its unit variable cost is $243. one unit of
the product requires 16 ounces of the constrained resource. monthly sales are 9,300
units. what is the profitability index for product g94t?
a.$565,440
b.0.20
c.$3.80 per ounce
d.$19.00 per ounce
8) harrell company uses a predetermined overhead rate based on direct labor-hours to
apply manufacturing overhead to jobs. at the beginning of the year the company
estimated its total manufacturing overhead cost at $400,000 and its direct labor-hours at
100,000 hours. the actual overhead cost incurred during the year was $350,000 and the
actual direct labor-hours incurred on jobs during the year was 90,000 hours. the
manufacturing overhead for the year would be:
a.$10,000 underapplied
b.$10,000 overapplied
c.$50,000 underapplied
d.$50,000 overapplied
9) schoenfeld corporation is developing direct labor standards. the basic direct labor
wage rate is $10.00 per hour. employment taxes are 9% of the basic wage rate. fringe
benefits are $3.71 per direct labor-hour. a particular product requires 0.88 direct
labor-hours per unit. the allowance for breaks and personal needs is 0.06 direct
labor-hours per unit. the allowance for cleanup, machine downtime, and rejects is 0.09
direct labor-hours per unit.
the standard rate per direct labor-hour should be:
a.$4.61
b.$10.00
c.$5.39
d.$14.61
10) fouch company makes 30,000 units per year of a part it uses in the products it
manufactures. the unit product cost of this part is computed as follows:
an outside supplier has offered to sell the company all of these parts it needs for $51.90
a unit. if the company accepts this offer, the facilities now being used to make the part
could be used to make more units of a product that is in high demand. the additional
contribution margin on this other product would be $219,000 per year.
if the part were purchased from the outside supplier, all of the direct labor cost of the
part would be avoided. however, $6.20 of the fixed manufacturing overhead cost being
applied to the part would continue even if the part were purchased from the outside
supplier. this fixed manufacturing overhead cost would be applied to the company’s
remaining products.
required:
a. how much of the unit product cost of $52.30 is relevant in the decision of whether to
make or buy the part?
b. what is the net total dollar advantage (disadvantage) of purchasing the part rather
than making it?
c. what is the maximum amount the company should be willing to pay an outside
supplier per unit for the part if the supplier commits to supplying all 30,000 units
required each year?
11) bacho corporation reports that at an activity level of 5,400 units, its total variable
cost is $416,934 and its total fixed cost is $142,560.
what would be the total variable cost at an activity level of 5,500 units? assume that this
level of activity is within the relevant range.
a.$424,655
b.$559,494
c.$416,934
d.$145,200
12) giguere corporation applies manufacturing overhead to products on the basis of
standard machine-hours. for the most recent month, the company based its budget on
2,000 machine-hours. budgeted and actual overhead costs for the month appear below:
the company actually worked 1,920 machine-hours during the month. the standard
hours allowed for the actual output were 1,760 machine-hours for the month. what was
the overall variable overhead efficiency variance for the month?
a.$832 unfavorable
b.$220 favorable
c.$1,888 unfavorable
d.$1,056 favorable
13) finnefrock inc. produces and sells a single product. the company has provided its
contribution format income statement for december.
if the company sells 9,200 units, its net operating income should be closest to:
a.$115,800
b.$95,800
c.$110,975
d.$78,600
14) last year, gransky corporation’s variable costing net operating income was $52,100
and its ending inventory increased by 400 units. fixed manufacturing overhead cost was
$7 per unit. what was the absorption costing net operating income last year?
a.$52,100
b.$2,800
c.$54,900
d.$49,300