1) The Portland Division’s operating data for the past two years is as follows:
The Portland Division’s margin in Year 2 was 150% of the margin for Year 1.
The turnover for Year 1 was:
A.10.00
B.2.00
C.1.50
D.3.20
2) The variance that is usually most useful in assessing the performance of the
purchasing department manager is:
A.the materials quantity variance.
B.the materials price variance.
C.the labor rate variance.
D.the labor efficiency variance.
3) Kaeser Corporation’s most recent balance sheet appears below:
The company’s net income for the year was $52 and it did not sell or retire any property,
plant, and equipment during the year. Cash dividends were $9. The net cash provided
by (used in) investing activities for the year was:
A.$17
B.$67
C.($17)
D.($67)
4) Dennisport Corporation has an acid-test ratio of 2.5. It has current liabilities of
$40,000 and noncurrent assets of $70,000. The corporation’s current assets consist of
cash, marketable securities, accounts receivable, prepaid expenses, and inventory; it has
no short-term notes receivable. If Dennisport’s current ratio is 3.1, its inventory and
prepaid expenses must be:
A.$12,400
B.$24,000
C.$30,000
D.$40,000
5) During the year the balance in the Prepaid Expenses account increased by $6,000. In
order to adjust the company’s net income to a cash basis using the direct method on the
statement of cash flows, it would be necessary to:
A.subtract the $6,000 from the selling and administrative expenses reported on the
income statement.
B.add the $6,000 to the selling and administrative expenses reported on the income
statement.
C.subtract the $6,000 from the cost of goods sold reported on the income statement.
D.add the $6,000 to the cost of goods sold reported on the income statement.
6) Crooks Corporation processes sugar beets in batches that it purchases from farmers
for $57 a batch. A batch of sugar beets costs $12 to crush in the company’s plant. Two
intermediate products, beet fiber and beet juice, emerge from the crushing process. The
beet fiber can be sold as is for $28 or processed further for $17 to make the end product
industrial fiber that is sold for $67. The beet juice can be sold as is for $39 or processed
further for $24 to make the end product refined sugar that is sold for $54. Which of the
intermediate products should be processed further?
A.beet fiber should be processed into industrial fiber; beet juice should be processed
into refined sugar
B.beet fiber should be processed into industrial fiber; beet juice should NOT be
processed into refined sugar
C.beet fiber should NOT be processed into industrial fiber; beet juice should be
processed into refined sugar
D.beet fiber should NOT be processed into industrial fiber; beet juice should NOT be
processed into refined sugar
7) The following T-accounts have been constructed from last year’s records at C&C
Manufacturing:
C&C Manufacturing uses job-order costing with a predetermined overhead rate and
applies manufacturing overhead to jobs based on direct labor costs. What is the
predetermined overhead rate?
A.125%
B.120%
C.100%
D.105%
8) Ort Corporation has provided the following data from its activity-based costing
accounting system:
Distribution of Resource Consumption across Activity Cost Pools:
The “Other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products.
How much indirect factory wages and factory equipment depreciation cost would be
assigned to the Customer Orders activity cost pool?
A.$236,000
B.$184,000
C.$230,000
D.$460,000
9) Bracken Corporation is a small wholesaler of gourmet food products. Data regarding
the store’s operations follow:
Sales are budgeted at $330,000 for November, $340,000 for December, and $340,000
for January.
Collections are expected to be 80% in the month of sale, 17% in the month following
the sale, and 3% uncollectible.
The cost of goods sold is 75% of sales.
The company would like to maintain ending merchandise inventories equal to 70% of
the next month’s cost of goods sold. Payment for merchandise is made in the month
following the purchase.
Other monthly expenses to be paid in cash are $21,800.
Monthly depreciation is $19,000.
Ignore taxes.
Expected cash collections in December are:
A.$340,000
B.$328,100
C.$272,000
D.$56,100
10) Jawson Corporation uses the weighted-average method in its process costing
system. Operating data for the Painting Department for the month of April appear
below:
What were the equivalent units for conversion costs in the Painting Department for
April?
A.67,300
B.68,820
C.70,520
D.63,900
11) Fruchter Corporation keeps careful track of the time required to fill orders. The
times recorded for a particular order appear below:
The throughput time was:
A.4.6 hours
B.32.8 hours
C.11.0 hours
D.37.4 hours
12) The company’s average collection period (age of receivables) for Year 2 is closest
to:
A.35.7 days
B.1.1 days
C.1.0 days
D.35.2 days
13) A study has been conducted to determine if Product A should be dropped. Sales of
the product total $400,000 per year; variable expenses total $270,000 per year. Fixed
expenses charged to the product total $160,000 per year. The company estimates that
$70,000 of these fixed expenses are not avoidable even if the product is dropped. If
Product A is dropped, the company’s overall net operating income would:
A.decrease by $40,000 per year
B.increase by $40,000 per year
C.decrease by $30,000 per year
D.increase by $30,000 per year
14) The company’s return on total assets for Year 2 is closest to:
A.1.77%
B.2.46%
C.1.80%
D.2.42%
15) Stitt 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 5,900 units, but its actual level of activity was 5,880 units. The
company has provided the following data concerning the formulas used in its budgeting
and its actual results for November:
Data used in budgeting:
Actual results for November:
The direct labor in the planning budget for November would be closest to:
A.$35,264
B.$37,044
C.$35,384
D.$37,170
16) Data concerning Hinkson Corporation’s single product appear below:
Fixed expenses are $720,000 per month. The company is currently selling 8,000 units
per month. The marketing manager would like to introduce sales commissions as an
incentive for the sales staff. The marketing manager has proposed a commission of $9
per unit. In exchange, the sales staff would accept a decrease in their salaries of $60,000
per month. (This is the company’s savings for the entire sales staff.) The marketing
manager predicts that introducing this sales incentive would increase monthly sales by
100 units. What should be the overall effect on the company’s monthly net operating
income of this change?
A.increase of $59,100
B.decrease of $121,700
C.increase of $894,300
D.decrease of $1,700
17) Hosang Corporation has two operating divisions–an Atlantic Division and a Pacific
Division. The company’s Logistics Department services both divisions. The variable
costs of the Logistics Department are budgeted at $32 per shipment. The Logistics
Department’s fixed costs are budgeted at $243,000 for the year. The fixed costs of the
Logistics Department are determined based on peak-period demand.
How much Logistics Department cost should be charged to the Atlantic Division at the
end of the year?
A.$123,450
B.$103,200
C.$135,450
D.$193,500
18) Elliot Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
What is the net operating income for the month under absorption costing?
A.$(19,600)
B.$9,600
C.$8,400
D.$18,000