1) Refusing gifts or favors that could be perceived to influence your actions is an
example of which ethical standard?
A) Credibility
B) Integrity
C) Confidentiality
D) Competence
2) The ability of a company to collect receivables is measured by which ratio?
A) Inventory turnover ratio
B) Day’s sales in receivables
C) Current ratio
D) Acid-test ratio
3) Which costs comprise WIP inventory on a production cost report?
A) Direct materials and direct labor
B) Direct materials and manufacturing overhead
C) Direct materials, direct labor, and manufacturing overhead
D) Direct labor and manufacturing overhead
4) River Mills manufactures reproduction antique furniture using historic
manufacturing methods. River often uses waterpower, which is not only historically
accurate, but also saves energy costs. Although River uses old-fashioned manufacturing
techniques it is still a modern company that performs modern business analysis. River
incurred actual fixed manufacturing overhead costs of $286,000. Using standard
costing, River allocated $225,000 in fixed manufacturing overhead costs. If River
observed a $2,125 unfavorable fixed manufacturing overhead volume variance, what
amount had management budgeted for fixed manufacturing overhead?
A) $222,874
B) $288,125
C) $283,875
D) $227,125
5) The following data is related to sales and production of the Tauro Corporation for last
year.
Required:
a.Prepare an income statement for last year using absorption costing.
b.Calculate the value of the ending inventory using absorption costing.
c.Prepare an income statement for last year using variable costing.
d.Calculate the value of the ending inventory using variable costing.
6) Raymond Corporation has an ROI of 31%, total assets of $6,300,000, and current
liabilities of $820,000. What is Raymond Corporation’s operating income?
A) $25,200
B) $2,645,161
C) $20,322,581
D) $1,953,000
7) For which of the following do we prepare calculations for equivalent units?
A) Both direct labor and manufacturing overhead
B) Both direct materials and conversion costs
C) Both direct labor and direct materials
D) Neither direct materials nor conversion costs
8) Here is selected data for Lori Corporation:
The journal entry to close manufacturing overhead would include a:
A) credit to manufacturing overhead for $4,000
B) debit to work in process inventory for $4,000
C) credit to work in process inventory for $4,000
D) credit to cost of goods sold for $4,000
9) On a contribution margin income statement, sales revenue less variable expenses
equals
A) operating expenses
B) gross profit
C) operating income
D) contribution margin
10) Which of the following is not an approach used to calculate the breakeven point?
A) The income statement approach
B) The shortcut approach using the unit contribution margin
C) The balance sheet approach
D) The shortcut approach using the contribution margin ratio
11) Nadal Corporation manufactures custom molds for use in the extrusion industry.
The company allocates manufacturing overhead based on machine hours. Selected data
for costs incurred for Job 532 are as follows:
What is the manufacturing cost of Job 532?
A) $3,300
B) $40,800
C) $85,800
D) $44,100
12) Beartowne Enterprises uses an activity-based costing system to assign costs in its
auto-parts division.
The following units were produced in December with the following information:
Total manufacturing costs for Part 002 is
A) $12,750
B) $4,000
C) $10,000
D) $18,750
13) A graph of a flexible budget formula reflects fixed costs of $45,000 per month and
total costs of $100,000 at a volume of 5,000 units. Assuming the relevant range is 1,000
to 20,000 units, the graph would reflect total monthly costs at 15,000 units of what
dollar amount?
A) $210,000
B) $100,000
C) $345,000
D) $165,000
14) ________ is the system for assigning costs to unique cost objects.
A) Time costing
B) Process costing
C) Job costing
D) Service costing
15) (Present value tables are needed.) The Janus Vending Machine Company is looking
to expand its business by adding a new line of vending machines. The management
team is considering expanding into either soda machines or snack machines. Following
is the relevant financial data relating to the decision:
Using the net present value model, which alternative should Janus Vending Machine
Company select?
A) The snack machines should be selected
B) The soda machines should be selected
C) Both investments should be selected
D) Neither investment should be selected
16) If a company sells 13 of Product A for every 3 of Product B that it sells, the sales
mix can be stated as
A) 13:3
B) 13/16 A and 3/16 B
C) both “13:3″ and ” 13/16 A and 3/16 B” are correct
D) neither “13:3″ nor ” 13/16 A and 3/16 B” is correct
17) Dove Incorporated has operating income of $650,000, a sales margin of 10%, and a
capital turnover rate of 2.0 . What amount would Dove report for sales?
A) $1,300,000
B) $6,500,000
C) $65,000
D) $325,000
18) Dagny Enterprises has a target rate of return of 10%, an ROI of 48%, and capital
turnover of 3.0 . The sales margin for Dagny Enterprises would be closest to
A) 144%
B) 16%
C) 3%
D) 30%
19) Simpson Corporation operates two divisions with the following operating results
from last year:
Management is considering whether the Eastern Division should be discontinued since
it incurred an operating loss last year. Allocated common fixed costs would continue for
Simpson Corporation whether the division is discontinued or not.
If the Eastern Division had been discontinued at the beginning of last year, what would
the total operating income for Simpson Corporation have been for the year?
A) $55,000
B) $20,000
C) $25,000
D) $110,000
20) Which of the following is the formula for computing the rate of return on total
assets?
A) (Net income – preferred dividends)/number of shares of outstanding common stock
B) Net income/net sales
C) (Net income + interest expense)/average total assets
D) (Net income – preferred dividends)/average common stockholders’ equity
21) Lucky Cow Dairy provided the following expense information for May:
What is the total cost for the marketing category of the value chain?
A) $69,000
B) $188,000
C) $197,000
D) $267,000
22) Materials are added at the beginning of the process and conversion costs are added
uniformly.
At period end, what would be the total equivalent units for direct materials?
A) 38,500
B) 56,500
C) 52,000
D) 43,000
23) To follow is information about the units produced and total manufacturing costs for
Pine Enterprises for the past six months.
Using the high-low method, what is the monthly fixed manufacturing cost?
A) $3,900
B) $14,650
C) $1,650
D) $4,250
24) The following information is available for the Bower Corporation for last year:
Raw materials inventory decreased $4,000 from the beginning of the year to the end of
the year.
Raw materials inventory on December 31 (end of year) was 50% of raw materials
inventory on January 1 (beginning of year).
Beginning work in process inventory was $145,000.
Ending finished goods inventory was $65,000.
Purchases of direct materials were $154,700.
Manufacturing overhead was 50% of the cost of direct labor.
Total manufacturing costs incurred were $246,400, 80% of cost of goods manufactured
and $156,000 less than cost of goods sold.
Compute:
a)finished goods inventory on January 1 (beginning of year)
b)work in process inventory on December 31 (end of year)
c)direct labor incurred
d)manufacturing overhead incurred
e)direct materials used
f)raw materials inventory on January 1 (beginning of year)
g)raw materials inventory on December 31 (end of year)
Note to students: The solutions to this problem are not necessarily calculated in
alphabetical order.
25) On the direct materials budget, the total quantity of direct materials needed is
computed as
A) quantity needed for production + desired end inventory of DM – beginning inventory
of DM
B) units to be produced + desired end inventory of DM – beginning inventory of DM
C) units to be produced – desired end inventory of DM + beginning inventory of DM
D) quantity needed for production – desired end inventory of DM + beginning inventory
DM
26) Costs incurred in detecting poor quality goods or services are what type of costs?
A) External failure costs
B) Appraisal costs
C) Internal failure costs
D) Prevention costs
27) Platz Company makes chairs. The budgeted selling price is $45 per chair, the
variable rate is $15 per chair and budgeted fixed costs are $40,000 per month. What is
the budgeted operating income for 3,200 chairs sold in a month?
A) $88,000
B) $96,000
C) $56,000
D) $144,000