1) Cabal Products is a division of a major corporation. Last year the division had total
sales of $10,040,000, net operating income of $582,320, and average operating assets of
$4,000,000. The company’s minimum required rate of return is 14%.
The division’s turnover is closest to:
A.2.19
B.17.24
C.0.15
D.2.51
2) Sirmons Corporation manufactures and sells one product. The following information
pertains to the company’s first year of operations:
The company does not have any variable manufacturing overhead costs or variable
selling and administrative costs. During its first year of operations, the company
produced 46,000 units and sold 45,000 units. The company’s only product is sold for
$249 per unit.
The net operating income for the year under super-variable costing is:
A.$1,321,000
B.$1,225,000
C.$1,395,000
D.$1,340,000
3) Dilbert Farm Supply is located in a small town in the rural west. Data regarding the
store’s operations follow:
Sales are budgeted at $260,000 for November, $230,000 for December, and $210,000
for January.
Collections are expected to be 80% in the month of sale, 19% in the month following
the sale, and 1% uncollectible.
The cost of goods sold is 65% of sales.
The company desires to have an ending merchandise inventory at the end of each
month equal to 60% of the next month’s cost of goods sold. Payment for merchandise is
made in the month following the purchase.
Other monthly expenses to be paid in cash are $20,300.
Monthly depreciation is $20,000.
Ignore taxes.
The accounts receivable balance, net of uncollectible accounts, at the end of December
would be:
A.$46,000
B.$93,100
C.$43,700
D.$81,300
4) Wesolick Clinic uses client-visits as its measure of activity. During August, the clinic
budgeted for 2,900 client-visits, but its actual level of activity was 2,870 client-visits.
The clinic has provided the following data concerning the formulas used in its
budgeting and its actual results for August:
Data used in budgeting:
Actual results for August:
The administrative expenses in the planning budget for August would be closest to:
A.$6,974
B.$6,880
C.$6,874
D.$7,047
5) Crosswhite Corporation’s sales last year were $1,270,000, its gross margin was
$400,000, its net operating income was $53,769, and its net income was $26,500. The
company’s net profit margin percentage is closest to:
A.31.5%
B.3.2%
C.4.2%
D.2.1%
6) Johnston Corporation manufactures a single product that it sells for $30 per unit. The
company has the following cost structure:
Last year there was no beginning inventory. During the year, 20,000 units were
produced and 17,000 units were sold.
The company’s net operating income for the year under variable costing is:
A.$110,000
B.$149,000
C.$161,000
D.$170,000
7) For performance evaluation purposes, any variance between budgeted fixed costs
and actual fixed costs in a service department:
A.should be allocated both to operating departments and to other service departments
on the basis of usage.
B.should be allocated to operating departments only on the basis of usage.
C.should be allocated to other service departments only on the basis of usage.
D.should be retained in the service department itself.
8) The debt-to-equity ratio at the end of Year 2 is closest to:
A.0.43
B.0.24
C.0.17
D.0.54
Debt-to-equity ratio = Total liabilities Stockholders’ equity = $440 $1.020 = 0.43
(rounded)
Data from Lheureux Corporation’s most recent balance sheet and the company’s income
statement appear below:
9) The company’s times interest earned for Year 2 is closest to:
A.7.71
B.2.61
C.5.01
D.4.01
10) Contribution margin means:
A) what remains from total sales after deducting fixed expenses.
B) what remains from total sales after deducting cost of goods sold.
C) the sum of cost of goods sold and variable expenses.
D) what remains from total sales after deducting all variable expenses.