1) eagen corporation manufactures a variety of products. the following data pertain to
the company’s operations over the last two years:
required:
a. determine the absorption costing net operating income for last year. show your work!
b. determine the absorption costing net operating income for this year. show your work!
2) the apoundright company uses standard costing and has established the following
standards for its single product:
direct materials: 2 gallons at $3 per gallon
direct labor: 0.5 hours at $8 per hour
variable overhead: 0.5 hours at $2 per hour
during november, the company made 4,000 units and incurred the following costs:
direct materials purchased: 8,100 gallons at $3.10 per gallon
direct materials used: 7,600 gallons
direct labor used: 2,200 hours at $8.25 per hour
actual variable overhead: $4,175
the company applies variable overhead to products on the basis of standard direct
labor-hours.
the total variable overhead variance (including both the rate and efficiency variances)
for november was:
a.$175 u
b.$225 f
c.$225 u
d.$400 u
3) the contribution approach to the income statement:
a.organizes costs on a functional basis
b.is useful to managers in planning and decision making
c.shows a contribution margin rather than a net operating income figure at the bottom of
the statement
d.can be used only by manufacturing companies
4) lampert corporation manufactures and sells a single product. the company uses units
as the measure of activity in its budgets and performance reports. during march, the
company budgeted for 6,100 units, but its actual level of activity was 6,060 units. the
company has provided the following data concerning the formulas used in its budgeting
and its actual results for march:
the spending variance for direct materials in march would be closest to:
a.$900 f
b.$900 u
c.$1,376 u
d.$1,376 f
5) delreal inc.’s inspection costs are listed below:
management believes that inspection cost is a mixed cost that depends on the number of
units produced. using the least-squares regression method, the estimates of the variable
and fixed components of inspection cost would be closest to:
a.$20.27 per unit plus $5,905 per month
b.$44.44 per unit plus $10,867 per month
c.$20.68 per unit plus $5,807 per month
d.$20.57 per unit plus $5,837 per month
6) dilom farm supply is located in a small town in the rural west. data regarding the
store’s operations follow:
sales are budgeted at $260,000 for november, $230,000 for december, and $210,000 for
january.
collections are expected to be 55% in the month of sale, 40% in the month following
the sale, and 5% uncollectible.
the cost of goods sold is 80% of sales.
the company purchases 50% of its merchandise in the month prior to the month of sale
and 50% in the month of sale. payment for merchandise is made in the month following
the purchase.
other monthly expenses to be paid in cash are $21,700.
monthly depreciation is $17,000.
ignore taxes.
expected cash collections in december are:
a.$126,500
b.$230,500
c.$104,000
d.$230,000
7) in the most recent month, flamino corporation’s total contribution margin was
$83,700 and its net operating income $21,200.
required:
a. compute the degree of operating leverage to two decimal places.
b. using the degree of operating leverage, estimate the percentage change in net
operating income that should result from a 17% increase in sales.
8) costs associated with two alternatives, code-named q and r, being considered by lang
corporation are listed below:
required:
a. which costs are relevant and which are not relevant in the choice between these two
alternatives?
b. what is the differential cost between the two alternatives?
9) the cost associated with idle time should be:
a.included as part of direct labor cost
b.treated as part of manufacturing overhead
c.added directly to cost of goods sold for the period
d.included as part of selling and administrative expenses
10) tator corporation reported the following data for the month of april:
the cost of goods sold for april was:
a.$178,000
b.$146,000
c.$126,000
d.$234,000
11) an increase in the plant and equipment account of $100,000 over the course of a
year would be shown on the company’s statement of cash flows prepared under the
indirect method as:
a.an addition to net income of $100,000 in order to arrive at net cash provided by
operating activities
b.a deduction from net income of $100,000 in order to arrive at net cash provided by
operating activities
c.an addition of $100,000 under investing activities
d.a deduction of $100,000 under investing activities
12) dantuono corporation manufactures and sells a single product. the company uses
units as the measure of activity in its budgets and performance reports. during
november, the company budgeted for 7,700 units, but its actual level of activity was
7,720 units. the company has provided the following data concerning the formulas used
in its budgeting and its actual results for november:
the selling and administrative expenses in the planning budget for november would be
closest to:
a.$30,490
b.$29,974
c.$30,504
d.$29,896