Connections Company provides cleaning services to commercial and residential
customers. The commercial business segment provided services to 270 customers and
the residential business segment provided services to 665 customers.
Identify the segment with the lower contribution margin ratio and show the amount of
its contribution margin ratio. (Round your answer to two decimals.)
A) Residential, 55.17%
B) Commercial, 40.60%
C) Residential, 44.83%
D) Commercial, 27.66%
The term goal congruence refers to the ________.
A) matching of financial goals of the company with its nonfinancial goals
B) aligning the goals of business segment managers with the goals of top management
C) achievement of the goals set by the management by utilizing the resources available
D) duplication of costs as a result of decentralization
Spirit Company makes special equipment used in cell towers. Each unit sells for $400.
Spirit produces and sells 12,500 units per year. They have provided the following
income statement data:
A foreign company has offered to buy 85 units for a reduced sales price of $350 per
unit. The marketing manager says the sale will not affect the company’s regular sales.
The sales manager says that this sale will require additional selling and administrative
costs, as it is a one-time deal. The production manager reports that there is plenty of
excess capacity to accommodate the deal without requiring any additional fixed costs. If
Spirit accepts the deal, how will this impact operating income? (Round any
intermediate calculations to the nearest cent, and your final answer to the nearest
dollar.)
A) Operating income will increase by $21,590.
B) Operating income will decrease by $21,590.
C) Operating income will increase by $29,750.
D) Operating income will decrease by $29,750.
Under a standard cost system, the journal entry to record direct labor includes
________.
A) a debit for standard direct labor quantity for actual production times standard direct
labor cost per hour
B) a credit for standard quantity usage for actual production times actual cost per hour
C) a debit for actual quantity times standard cost per hour
D) a credit for standard quantity for actual production times standard cost per hour
Manhattan Enterprises manufactures cookware sets and sells the sets to department
stores. Manhattan expects to sell 2,400 cookware sets for $200 each in April and 3,500
cookware sets for $215 each in May. Sales are 15% cash and 85% on account. Compute
the total budgeted sales for May.
A) $752,500
B) $480,000
C) $112,875
D) $9,594,375
Which of the following is a period cost?
A) manufacturing overhead
B) direct labor cost
C) direct materials cost
D) administrative cost
Mountain Sports Equipment Company projected sales of 81,000 units at a unit sales
price of $14 for the year. Actual sales for the year were 75,000 units at $13.00 per unit.
Variable costs were budgeted at $2 per unit, and the actual amount was $4 per unit.
Budgeted fixed costs totaled $375,000, while actual fixed costs amounted to $425,000.
What is the sales volume variance for total revenue?
A) $159,000 favorable
B) $159,000 unfavorable
C) $84,000 unfavorable
D) $84,000 favorable
Winnie, Inc. has two processes-Coloring Department and Mixing Department. The
company assigned $390,000 to the 6,000 gallons of paint transferred from Mixing
Department to Finished Goods Inventory. The journal entry to record completion of
processing is ________.
A) debit Work-in-Process Inventory-Mixing, $390,000; credit Finished Goods
Inventory, $390,000
B) debit Finished Goods Inventory, $390,000; credit Cost of Goods Sold, $390,000
C) debit Cost of Goods Sold, $390,000; credit Finished Goods Inventory, $390,000
D) debit Finished Goods Inventory, $390,000; credit Work-in-Process
Inventory-Mixing, $390,000
Glades Thread Company is evaluating an investment that will cost $720,000 and will
yield cash flows of $230,000 in the first year, $370,000 in the second year, and
$360,000 in the third and the final year. Use the table below and determine the internal
rate of return.
Present value of $1:
The IRR of the project will be ________.
A) between 11% and 12%
B) less than 10%
C) less than 11%, more than 10%
D) more than 12%
Productions costs are transferred from one Work-in-Process Inventory account to the
next and eventually to ________.
A) Manufacturing Overhead
B) Sales Revenue
C) Finished Goods Inventory
D) Accounts Payable
The budgeted income statement________.
A) reports cash paid for purchases of direct materials
B) includes amounts from the sales, cost of goods sold, cash, and capital expenditures
budgets
C) is accrual-based
D) does not include depreciation expense
Reichert Company manufactures ceiling fans and uses an activity-based costing system.
Each ceiling fan has 20 separate parts. The direct materials cost is $95, and each ceiling
fan requires 3.00 hours of machine time to manufacture. Additional information is as
follows:
What is the cost of machining per ceiling fan? (Round any intermediate calculations
and your final answer to the nearest cent.)
A) $18.00
B) $95.00
C) $120.00
D) $199.50
Engelhardt, Inc., a law consulting firm, has been using a single predetermined overhead
allocation rate with direct labor hours as the allocation base to allocate overhead costs.
The direct labor rate is $40 per hour. Ted Heath, the president of Engelhardt, decided to
develop an ABC system to accurately allocate the indirect costs. He identified two
activities related to the total indirect costs-travel and information technology (IT)
support. The other relevant details are given below:
During the current month, Engelhardt’s consultants spent 150 labor hours for
Cunningham, Inc. The job required the professionals to travel 400 miles in total.
Determine the total cost of the consulting job using the ABC system. (Round any
intermediate calculations to the nearest cent and your final answer to the nearest dollar.)
A) $6,000
B) $1,760
C) $6,600
D) $21,400
Flannery Company, a manufacturer of small appliances, had the following activities,
allocated costs, and allocation bases:
The above activities are carried out at two of its regional offices.
What is the cost per letter for the correspondence activity? (Round your answer to the
nearest cent.)
A) $12.00
B) $45.00
C) $4.44
D) $0.80
Reed Productions has provided the following information for the year:
During the year, Reed produced 71,220 units of product. Calculate the unit product cost.
(Round your answer to the nearest cent.)
A) $7.92
B) $6.77
C) $7.78
D) $8.66
The Refining Department of Sweet Sugar, Inc. had 79,000 tons of sugar to account for
in July. Of the 79,000 tons, 49,000 tons were completed and transferred to the Boiling
Department, and the remaining 30,000 tons were 50% complete. The materials required
for production are added at the beginning of the process. Conversion costs are added
equally throughout the refining process. Calculate the total equivalent units of
production for direct materials.
A) 64,000 units
B) 49,000 units
C) 15,000 units
D) 79,000 units
