1) ben company produces a single product. last year, the company’s net operating
income under absorption costing was $4,400 lower than under variable costing. the
company sold 8,000 units during the year, and its variable costs were $8 per unit, of
which $3 was variable selling expense. fixed manufacturing overhead was $1 per unit
in beginning inventory under absorption costing. how many units did the company
produce during the year?
a.12,400 units
b.3,600 units
c.7,120 units
d.7,450 units
2) suoboda corporation uses the following activity rates from its activity-based costing
to assign overhead costs to products:
how much overhead cost would be assigned to product i90w using the activity-based
costing system?
a.$316.56
b.$105.05
c.$4,371.90
d.$59,038.10
3) okino company’s management believes that every 8% increase in the selling price of
one of the company’s products would lead to a 17% decrease in the product’s total unit
sales. the variable cost per unit of this product is $44.60.
required:
a. compute the product’s price elasticity of demand as defined in the text.
b. compute the product’s profit-maximizing price according to the formula in the text.
4) govoni corporation is a specialty component manufacturer with idle capacity.
management would like to use its extra capacity to generate additional profits. a
potential customer has offered to buy 9,500 units of component aig. each unit of aig
requires 6 units of material m51 and 4 units of material m93. data concerning these two
materials follow:
material m51 is in use in many of the company’s products and is routinely replenished.
material m93 is no longer used by the company in any of its normal products and
existing stocks would not be replenished once they are used up.
what would be the relevant cost of the materials, in total, for purposes of determining a
minimum acceptable price for the order for product aig?
a.$505,667
b.$502,550
c.$458,850
d.$464,550
5) a manufacturing company that produces a single product has provided the following
data concerning its most recent month of operations:
what is the absorption costing unit product cost for the month?
a.$107
b.$94
c.$87
d.$114
6) spanner company recorded the following events last year:
on the statement of cash flows, some of these events are classified as operating
activities, some are classified as investing activities, and some are classified as
financing activities.
based solely on the information above, the net cash provided by (used in) investing
activities on the statement of cash flows would be:
a.$(430,000)
b.$(935,000)
c.$(580,000)
d.$(300,000)
7) fickling corporation has two operating divisions-a consumer division and a
commercial division. the company’s order fulfillment department provides services to
both divisions. the variable costs of the order fulfillment department are budgeted at
$51 per order. the order fulfillment department’s fixed costs are budgeted at $484,000
for the year. the fixed costs of the order fulfillment department are budgeted based on
the peak period orders.
at the end of the year, actual order fulfillment department variable costs totaled
$460,404 and fixed costs totaled $493,700. the consumer division had a total of 2,430
orders and the commercial division had a total of 6,390 orders for the year.
how much order fulfillment department cost should be allocated to the commercial
division at the end of the year?
a.$676,543
b.$679,148
c.$691,239
d.$664,690
8) baaca corporation has provided the following production and total cost data for two
levels of monthly production volume. the company produces a single product.
the best estimate of the total variable manufacturing cost per unit is:
a.$82.00
b.$70.20
c.$56.70
d.$11.80
9) higado confectionery corporation has a number of store locations throughout north
america. in income statements segmented by store, which of the following would be
considered a common fixed cost?
a.store manager salaries
b.store building depreciation expense
c.the cost of corporate advertising aired during the super bowl
d.all of these
10) suppose a machine that costs $80,000 has a useful life of 10 years. also suppose that
depreciation on the machine is $8,000 for tax purposes in year 4. the tax rate is 40%.
the tax savings from the depreciation tax shield in year 4 would be:
a.$4,800 inflow
b.$3,200 inflow
c.$4,800 outflow
d.$3,200 outflow
11) spettel corporation’s comparative balance sheet appears below:
the company’s net income (loss) for the year was $11,000 and its cash dividends were
$2,000.
the total dollar amount of all of the items that would be classified as sources when
compiling a simplified statement of cash flows is:
a.$9,000
b.$38,000
c.$40,000
d.$49,000
12) (ignore income taxes in this problem.) isomer industrial training corporation is
considering the purchase of new presentation equipment at a cost of $150,000. the
equipment has an estimated useful life of 10 years with an expected salvage value of
zero. the equipment is expected to generate net cash inflows of $35,000 per year in each
of the 10 years. isomer’s discount rate is 16%. isomer uses the straight-line method of
depreciation for its assets.
what is the net present value of the presentation equipment?
a.$950
b.$19,155
c.$(36,500)
d.$(53,340)
13) the following costs were incurred in august:
conversion costs during the month totaled:
a.$127,000
b.$51,000
c.$52,000
d.$75,000
14) excerpts from shelton corporation’s most recent balance sheet appear below:
sales on account in year 2 amounted to $1,320 and the cost of goods sold was $890.
the accounts receivable turnover for year 2 is closest to:
a.5.50
b.0.92
c.1.09
d.5.28
15) the axle division of labate company makes and sells only one product. annual data
on the axle division’s single product follow:
suppose the manager of axle desires an annual residual income of $45,000. in order to
achieve this, axle should sell how many units per year?
a.14,500
b.16,750
c.18,250
d.19,500