1) harwichport company has a current ratio of 3.5 and an acid-test ratio of 2.8. current
assets equal $175,000 of which $5,000 consists of prepaid expenses. the remainder of
current assets consists of cash, accounts receivable, marketable securities, and
inventory. harwichport company’s inventory must be:
a.$30,000
b.$40,000
c.$50,000
d.$35,000
2) super drive is a computer hard drive manufacturer. the company’s balance sheet for
the fiscal year ended on november 30 appears below:
additional information regarding super drive’s operations appear below:
sales are budgeted at $520,000 for december and $500,000 for january.
collections are expected to be 60% in the month of sale and 40% in the month
following sale. there are no bad debts.
80% of the disk drive components are purchased in the month prior to the month of the
sale, and 20% are purchased in the month of the sale. purchased components comprise
40% of the cost of goods sold.
payment for components purchased is made in the month following the purchase.
assume that the cost of goods sold is 80% of sales.
the budgeted cash collections for the upcoming december should be:
a.$208,000
b.$520,000
c.$402,000
d.$462,000
3) blomstrom products inc. makes two productsn81w and v55s. product n81w’s selling
price is $20.00 and its unit variable cost is $12.00. product v55s’s selling price is
$108.00 and its unit variable cost is $97.20. the monthly demand is 3,940 units for
product n81w and 1,140 units for v55s. the constrained resource is a particular machine
that is available for 10,400 minutes each month. each unit of product n81w requires 2
minutes on this machine and each unit of product v55s requires 6 minutes on this
machine.
what is the maximum contribution margin the company can earn per month?
a.$30,968
b.$43,832
c.$36,056
d.$26,552
4) elgot company produces a single product. the cost of producing and selling a single
unit of this product at the company’s normal activity level of 30,000 units per month is
as follows:
the normal selling price of the product is $51.10 per unit.
an order has been received from an overseas customer for 3,000 units to be delivered
this month at a special discounted price. this order would have no effect on the
company’s normal sales and would not change the total amount of the company’s fixed
costs. the variable selling and administrative expense would be $0.50 less per unit on
this order than on normal sales.
direct labor is a variable cost in this company.
suppose there is ample idle capacity to produce the units required by the overseas
customer and the special discounted price on the special order is $44.70 per unit. by
how much would this special order increase (decrease) the company’s net operating
income for the month?
a.$5,100
b.$(14,100)
c.$36,900
d.$(17,700)
5) jauron kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. during september, the kennel budgeted
for 2,300 tenant-days, but its actual level of activity was 2,310 tenant-days. the kennel
has provided the following data concerning the formulas used in its budgeting and its
actual results for september:
the wages and salaries in the planning budget for september would be closest to:
a.$13,741
b.$13,682
c.$13,781
d.$13,730
6) details of the manufacturing activity in amy company’s assembly department for the
month of december are given below:
all materials are added at the beginning of processing in the assembly department.
the equivalent units for labor and overhead for the month, using the weighted-average
method, is:
a.162,000
b.80,000
c.81,000
d.74,000
7) moulgadi corporation uses the fifo method in its process costing system. data
concerning the first processing department for the most recent month are listed below:
note: your answers may differ from those offered below due to rounding error. in all
cases, select the answer that is the closest to the answer you computed. to reduce
rounding error, carry out all computations to at least three decimal places.
the cost of a completed unit transferred out of the department is closest to:
a.$63.28
b.$59.70
c.$56.06
d.$71.98
8) simplex company has the following estimated costs for next year:
simplex estimates that 10,000 direct labor and 16,000 machine-hours will be worked
during the year. if overhead is applied on the basis of machine-hours, the overhead rate
per hour will be:
a.$8.56
b.$7.63
c.$6.94
d.$3.50
9) the following information relates to the cranberry division of innovative bologna
corporation for last year:
what was the cranberry division’s residual income for last year?
a.$26,400
b.$36,000
c.$41,400
d.$51,000
10) lesmerises corporation’s most recent balance sheet and income statement appear
below:
dividends on common stock during year 2 totaled $40 thousand. dividends on preferred
stock totaled $10 thousand. the market price of common stock at the end of year 2 was
$2.85 per share.
the gross margin percentage for year 2 is closest to:
a.53.4%
b.671.4%
c.34.8%
d.14.9%
11) at a sales volume of 37,000 units, bonham corporation’s property taxes (a cost that
is fixed with respect to sales volume) total $555,000.
to the nearest whole cent, what should be the average property tax per unit at a sales
volume of 38,600 units? (assume that this sales volume is within the relevant range.)
a.$15.00
b.$14.38
c.$15.90
d.$14.69
12) the most recent balance sheet and income statement of schneekloth corporation
appear below:
cash dividends were $37. the net cash provided by (used by) operations for the year
was:
a.$221
b.$188
c.$33
d.$122
13) henscheid corporation leases its corporate headquarters building. this lease cost is
fixed with respect to the company’s sales volume. in a recent month in which the sales
volume was 33,000 units, the lease cost was $283,800.
to the nearest whole dollar, what should be the total lease cost at a sales volume of
35,300 units in a month? (assume that this sales volume is within the relevant range.)
a.$283,800
b.$293,690
c.$303,580
d.$265,309
14) legard kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. during january, the kennel budgeted for
2,600 tenant-days, but its actual level of activity was 2,620 tenant-days. the kennel has
provided the following data concerning the formulas used in its budgeting and its actual
results for january:
the spending variance for expendables in january would be closest to:
a.$1,040 f
b.$1,306 f
c.$1,040 u
d.$1,306 u
15) when the level of activity increases within the relevant range, how does each of the
following change?
a.choice a
b.choice b
c.choice c
d.choice d