1) vanikoro corporation currently has two divisions which had the following operating
results for last year:
since the rubber division sustained a loss, the president of vanikoro is considering the
elimination of this division. all of the fixed costs for the division could be eliminated if
the division was dropped. if the rubber division was dropped at the beginning of last
year, how much higher or lower would vanikoro’s total net operating income have been
for the year?
a.$10,000 higher
b.$40,000 lower
c.$50,000 higher
d.$100,000 lower
2) grboyan corporation’s most recent balance sheet appears below:
the net income for the year was $116. cash dividends were $32. the net cash provided
by (used by) investing activities for the year was:
a.$93
b.($93)
c.$78
d.($78)
3) naval catering uses two measures of activity, jobs and meals, in the cost formulas in
its budgets and performance reports. the cost formula for catering supplies is $430 per
month plus $99 per job plus $10 per meal. a typical job involves serving a number of
meals to guests at a corporate function or at a host’s home. the company expected its
activity in march to be 12 jobs and 126 meals, but the actual activity was 9 jobs and 124
meals. the actual cost for catering supplies in march was $2,550. the catering supplies in
the planning budget for march would be closest to:
a.$3,400
b.$2,561
c.$2,550
d.$2,878
4) lifsey wedding fantasy company makes very elaborate wedding cakes to order. the
owner of the company has provided the following data concerning the activity rates in
its activity-based costing system:
the measure of activity for the size-related activity cost pool is the number of planned
guests at the wedding reception. the greater the number of guests, the larger the cake.
the measure of complexity is the number of tiers in the cake. the activity measure for
the order-related cost pool is the number of orders. (each wedding involves one order.)
the activity rates include the costs of raw ingredients such as flour, sugar, eggs, and
shortening. the activity rates do not include the costs of purchased decorations such as
miniature statues and wedding bells, which are accounted for separately.
data concerning two recent orders appear below:
assuming that all of the costs listed above are avoidable costs in the event that an order
is turned down, what amount would the company have to charge for the pyburn
wedding cake to just break even?
a.$279.87
b.$55.79
c.$29.92
d.$338.64
5) electrical costs at one of noyd corporation’s factories are listed below:
management believes that electrical cost is a mixed cost that depends on
machine-hours.
using the high-low method, the estimate of the variable component of electrical cost per
machine-hour is closest to:
a.$0.11
b.$8.92
c.$94.27
d.$8.56
6) vasconcelos corporation’s most recent balance sheet and income statement appear
below:
required:
compute the following for year 2:
a. working capital.
b. current ratio.
c. acid-test ratio.
d. accounts receivable turnover.
e. average collection period.
f. inventory turnover.
g. average sale period.
7) (ignore income taxes in this problem.) gimar corporation uses a discount rate of 16%
in its capital budgeting. partial analysis of an investment in automated equipment with a
useful life of 8 years has thus far yielded a net present value of -$423,974. this analysis
did not include any estimates of the intangible benefits of automating this process nor
did it include any estimate of the salvage value of the equipment.
ignoring any salvage value, to the nearest whole dollar how large would the additional
cash flow per year from the intangible benefits have to be to make the investment in the
automated equipment financially attractive?
a.$67,836
b.$423,974
c.$97,600
d.$52,997
8) caparros corporation manufactures a variety of products. variable costing net
operating income was $62,800 last year and was $74,900 this year. last year, ending
inventory decreased by 3,300 units. this year, ending inventory increased by 1,900
units. fixed manufacturing overhead cost is $7 per unit.
what was the absorption costing net operating income this year?
a.$88,200
b.$65,100
c.$61,600
d.$53,000
9) lavell corporation reported the following data for the month of february:
the net operating income for february was:
a.$20,000
b.$116,000
c.$86,000
d.$60,000
10) for performance evaluation purposes, the fixed costs of a service department should
be charged to operating departments using:
a.actual fixed costs and the budgeted level of activity for the period
b.budgeted fixed costs and the actual level of activity for the period
c.budgeted fixed costs and the peak-period or long-run average servicing capacity
d.actual fixed costs and the peak-period or long-run average servicing capacity