1) demand for a product is said to be elastic if a change in price has:
a.no effect on the volume of units sold
b.substantial effect on the volume of units sold
c.little effect on the volume of units sold
d.little effect on the volume of units produced
2) lakeside nursing home has two operating departments, custodial care and
rehabilitation. it also has a housekeeping department that serves the two operating
departments. the costs of the housekeeping department are all variable and are charged
to the operating departments on the basis of labor-hours. data for september follow:
the budgeted costs of the housekeeping department for september were $24,000 and the
actual costs were $29,760.
how much of the actual housekeeping department costs for september should not be
charged to the operating departments for performance evaluation purposes?
a.$960
b.$5,760
c.$0
d.$1,240
3) ferro wares is a division of a major corporation. the following data are for the latest
year of operations:
required:
a. what is the division’s return on investment (roi)?
b. what is the division’s residual income?
4) braston corporation is a small wholesaler of gourmet food products. data regarding
the store’s operations follow:
sales are budgeted at $350,000 for november, $330,000 for december, and $340,000 for
january.
collections are expected to be 70% in the month of sale, 26% in the month following
the sale, and 4% uncollectible.
the cost of goods sold is 70% 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 $20,100.
monthly depreciation is $22,000.
ignore taxes.
the excess (deficiency) of cash available over disbursements for december would be:
a.$20,200
b.$107,600
c.$43,700
d.$63,900
5) podkowka corporation has two products that use the same constrained resourcea
critical raw material.
the total amount of the constrained resource available is 10,400 grams.
required:
a. which product is most profitable, given the company’s constraint?
b. how much of each product should be produced?
c. what is the total contribution margin if your plan in part (b) above is followed?
d. the company is considering launching a new product whose variable cost is $112 and
that requires 10 grams of the constrained resource. what is the minimum selling price
for the new product?
6) which of the following performance measures will decrease if there is an increase in
the accounts receivable?
a.choice a
b.choice b
c.choice c
d.choice d
7) daughdrill corporation is developing direct labor standards. the basic direct labor
wage rate is $10.95 per hour. employment taxes are 9% of the basic wage rate. fringe
benefits are $4.00 per direct labor-hour. the standard rate per direct labor-hour should
be:
a.$5.96
b.$4.99
c.$10.95
d.$15.94
8) (ignore income taxes in this problem.) you have deposited $16,727 in a special
account that has a guaranteed interest rate. if you withdraw $4,300 at the end of each
year for 5 years, you will completely exhaust the balance in the account. the guaranteed
interest rate is closest to:
a.6%
b.29%
c.9%
d.26%
9) burget clinic uses client-visits as its measure of activity. during july, the clinic
budgeted for 2,100 client-visits, but its actual level of activity was 2,110 client-visits.
the clinic has provided the following data concerning the formulas used in its budgeting
and its actual results for july:
the revenue variance for july would be closest to:
a.$2,581 f
b.$2,110 u
c.$2,110 f
d.$2,581 u
10) the net operating income for december was:
a.$93,000
b.$159,000
c.$90,000
d.$156,000
11) wernett corporation’s net income for the most recent year was $1,509,000. a total of
200,000 shares of common stock and 100,000 shares of preferred stock were
outstanding throughout the year. dividends on common stock were $4.95 per share and
dividends on preferred stock were $1.35 per share. the earnings per share of common
stock is closest to:
a.$1.92
b.$7.55
c.$6.87
d.$2.60
12) in november, one of the processing departments at rullo corporation had beginning
work in process inventory of $23,000 and ending work in process inventory of $32,000.
during the month, $267,000 of costs were added to production and the cost of units
transferred out from the department was $258,000. the company uses the fifo method in
its process costing system. in the department’s cost reconciliation report for november,
the total cost to be accounted for would be:
a.$580,000
b.$557,000
c.$290,000
d.$55,000
13) the standards for product m74m specify 2.5 direct labor-hours per unit at $13.20 per
direct labor-hour. last month 3,160 units of product m74m were produced using 8,100
direct labor-hours at a total direct labor wage cost of $104,085.
required:
a. what was the labor rate variance for the month?
b. what was the labor efficiency variance for the month?
14) what effect will a year-end increase in the market price of a corporation’s common
stock have on the following ratios?
a.choice a
b.choice b
c.choice c
d.choice d