1) an unfavorable activity variance for a cost indicates that spending was higher than it
should have been for the actual level of activity for the period.
2) the emphasis in the balanced scorecard is on improvement rather than meeting a
preset standard.
3) ideal standards can only be attained under the best circumstances and allow for no
work interruptions.
4) the revenue and spending variances are the differences between the static planning
budget and the flexible budget.
5) the high-low method is generally less accurate than the least-squares regression
method for analyzing the behavior of mixed costs.
6) a change in deferred taxes is considered to be an investing activity on the statement
of cash flows.
7) the degree of operating leverage is greatest at sales levels near the break-even point
and decreases as sales rise.
8) if the assets in which funds are invested have a rate of return lower than the fixed
rate of return paid to the supplier of the funds, then financial leverage is positive.
9) return on investment (roi) may not be fully controllable by a manager because of
committed costs.
10) all other things the same, in periods of increasing sales, net operating income will
tend to increase more rapidly in a company with high variable costs and low fixed costs
than in a company with high fixed costs and low variable costs.
11) guadiana corporation’s balance sheet and income statement appear below:
cash dividends were $34. the company sold equipment for $11 that was originally
purchased for $5 and that had accumulated depreciation of $3.
required:
prepare a statement of cash flows for the year using the indirect method.
12) fagin company’s quality cost report is to be based on the following data:
what would be the total internal failure cost appearing on the quality cost report?
a.$150,000
b.$155,000
c.$178,000
d.$49,000
13) data from karmely corporation’s most recent balance sheet and the company’s
income statement appear below:
the times interest earned for year 2 is closest to:
a.6.11
b.7.11
c.10.16
d.4.29
14) brattain tile installation corporation measures its activity in terms of square feet of
tile installed. last month, the budgeted level of activity was 1,230 square feet and the
actual level of activity was 1,140 square feet. the company’s owner budgets for supply
costs, a variable cost, at $2.10 per square foot. the actual supply cost last month was
$3,260. in the company’s flexible budget performance report for last month, what would
have been the spending variance for supply costs?
a.$257 f
b.$866 u
c.$677 u
d.$189 f
15) bonniwell corporation has two divisions: the delta division and the alpha division.
the delta division has sales of $620,000, variable expenses of $359,600, and traceable
fixed expenses of $229,200. the alpha division has sales of $820,000, variable expenses
of $541,200, and traceable fixed expenses of $172,900. the total amount of common
fixed expenses not traceable to the individual divisions is $122,000. what is the
company’s net operating income?
a.$539,200
b.$15,100
c.$137,100
d.$417,200
16) which of the following statements is true concerning the cma?
a.to earn the cma, an examination must be passed
b.experience in the accounting field is not necessary to earn the cma
c.compliance with the institute of management accountants’ statement of ethical
professional practice is not necessary to earn the cma
d.both b and c above
17) henifin corporation has provided the following data concerning its most important
raw material, compound k91j:
the raw material was purchased on account.
the materials quantity variance for january would be recorded as a:
a.credit of $2,586
b.credit of $16,809
c.debit of $16,809
d.debit of $2,586
18) during august, sherill corporation incurred $78,000 of actual manufacturing
overhead costs. during the same period, the manufacturing overhead applied to work in
process was $81,000.
the manufacturing overhead applied is:
a.$28,000
b.$27,000
c.$29,000
d.$36,000
19) the commando motorcycle company has decided to become decentralized and split
its operations into two divisions, motor and assembly. both divisions will be treated as
investment centers. the motor division is currently operating at its capacity of 30,000
motors per year. motor’s costs at this level of production are as follows:
motor sells 10,000 of its motors to a snowmobile manufacturer and transfers the
remaining 20,000 motors to the assembly division. the two divisions are currently in a
debate over an appropriate transfer price to charge for the 20,000 motors. motor
currently charges the snowmobile manufacturer $200 per motor. the final selling price
of the motorcycles that commando produces is $7,200 per cycle. this selling price will
not change regardless of the transfer price charged between the two divisions. motor has
no market for the 20,000 motors if they are not transferred to assembly. variable selling
and administrative costs are incurred on both internal and external sales.
according to the formula in the text, what is the lowest acceptable transfer price from
the viewpoint of the selling division?
a.$35 per motor
b.$105 per motor
c.$125 per motor
d.$140 per motor
20) doubleday corporation produces and sells a single product. the company has
provided its contribution format income statement for august.
if the company sells 3,500 units, its net operating income should be closest to:
a.$33,000
b.$24,281
c.$22,200
d.$50,100
21) cabell company manufactures two products, product c and product d. the company
estimated it would incur $99,590 in manufacturing overhead costs during the current
period. overhead currently is applied to the products on the basis of direct labor-hours.
data concerning the current period’s operations appear below:
required:
a. compute the predetermined overhead rate under the current method, and determine
the unit product cost of each product for the current year.
b. the company is considering using an activity-based costing system to compute unit
product costs for external financial reports instead of its traditional system based on
direct labor-hours. the activity-based costing system would use three activity cost pools.
data relating to these activities for the current period are given below:
determine the unit product cost of each product for the current period using the
activity-based costing approach.
22) the following materials standards have been established for a particular product:
the following data pertain to operations concerning the product for the last month:
what is the materials price variance for the month?
a.$14,850 u
b.$8,250 u
c.$8,640 u
d.$2,860 f
23) marton corporation has provided the following data from its activity-based costing
accounting system:
the activity rate for the “designing products” activity cost pool is closest to:
a.$124 per product design hour
b.$181 per product design hour
c.$55 per product design hour
d.$1,526,916 per product design hour
24) silguero clinic has two service departments, administrative and support, and two
operating departments, adult medicine and pediatrics.
the clinic uses the direct method to allocate service department costs to operating
departments. administrative department costs are allocated on the basis of employee
hours and support department costs are allocated on the basis of space occupied in
square feet.
the total pediatrics department cost after the allocations of service department costs is
closest to:
a.$521,999
b.$524,830
c.$515,870
d.$525,825
25) arlon jeffries candy corporation produces and sells taffy by the bag and uses a
standard cost system to collect costs related to production. the following information
relates to arlon jeffries’ operations for last month:
required:
compute the unknown quantities above. (numbers 4, 6, 7, and 10)
26) kantor, inc., produces and sells a single product whose selling price is $180.00 per
unit and whose variable expense is $46.80 per unit. the company’s fixed expense is
$580,752 per month.
required:
determine the monthly break-even in either unit or total dollar sales. show your work!
27) sheen corporation’s balance sheet and income statement appear below:
cash dividends were $23.
required:
prepare a statement of cash flows using the indirect method.
28) the management of amacker 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 37,000 machine-hours. in addition, capacity is 43,000 machine-hours and the
actual activity for the year is 38,100 machine-hours. all of the manufacturing overhead
is fixed and is $604,580 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:
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.
29) gurr corporation produces and sells a single product whose contribution margin
ratio is 63%. the company’s monthly fixed expense is $604,800 and the company’s
monthly target profit is $50,400.
required:
determine the dollar sales to attain the company’s target profit. show your work!
30) burkhammer inc. has provided the following data for the month of august. there
were no beginning inventories; consequently, the direct materials, direct labor, and
manufacturing overhead applied listed below are all for the current month.
manufacturing overhead for the month was underapplied by $9,000.
the company allocates any underapplied or overapplied overhead among work in
process, finished goods, and cost of goods sold at the end of the month on the basis of
the overhead applied during the month in those accounts.
required:
determine the cost of work in process, finished goods, and cost of goods sold after
allocation of the underapplied or overapplied overhead for the period.
31) a company is considering purchasing an asset for $50,000 that would have a useful
life of 8 years and would have a salvage value of $7,000. for tax purposes, the entire
original cost of the asset would be depreciated over 8 years using the straight-line
method and the salvage value would be ignored. the asset would generate annual net
cash inflows of $18,000 throughout its useful life. the project would require additional
working capital of $2,000, which would be released at the end of the project. the
company’s tax rate is 30% and its discount rate is 15%.
required:
what is the net present value of the asset?