Weller, Inc. provided the following particulars for 2017:
Calculate the average number of days that inventory was held by Weller, Inc. during 2017.
(Assume 365 days in a year. Round your intermediate calculations and final answer to two
decimal places.)
A) 341.12 days
B) 218.56 days
C) 122.07 days
D) 170.56 days
Milford Lighting Supply expects the following for 2016:
Milford expects to spend $157,000 to modernize its showroom.
How much free cash flow does Milford expect for 2016?
A) $124,000
B) $277,000
C) $100,000
D) $107,000
Spencer’s gross pay for the week is $1,600. Spencer’s yearly pay is under the limit for
OASDI. Assume that the rate for state and federal unemployment compensation taxes is
6% and that Spencer’s year-to-date pay has not yet exceeded the $7,000 cap. What is the
amount of state and federal unemployment tax that his employer must record as payroll
tax expense and pay to the federal and state governments?
A) $225.84
B) $215.20
C) $119.20
D) $96.00
Shelcal, Inc. provides the following data for the year 2017:
The cost of goods sold as a percentage of net sales revenue is ________. (Round your
answer to two decimal places.)
A) 62.63%
B) 62.76%
C) 62.20%
D) 62.47%
Radar, Inc. purchased a van on January 1, 2016, for $830,000. Estimated life of the van
was five years, and its estimated residual value was $104,000. Radar uses the
straight-line method of depreciation. At the beginning of 2018, the corporation revised
the total estimated life of the asset from five years to six years. The estimated residual
value remained the same as estimated earlier. Calculate the depreciation expense for
2018.
A) $145,200
B) $134,900
C) $108,900
D) $72,600
Heung, Inc. reports the following information for the year ended December 31:
The operating income calculated using variable costing and absorption costing amounted
to $9,800 and $11,000, respectively. There were no beginning inventories. Determine the
total fixed manufacturing overhead that will be expensed under variable costing for the
year 2016.
A) $13,000
B) $11,800
C) $28,320
D) $34,220
The financial statements of Barker Office Furniture Company include the following
items:
What is working capital for 2017?
A) $204,000
B) $68,500
C) $36,500
D) $90,500
Fingertips, Inc. had the following financial data for the year ended December 31, 2017.
What is the cash ratio as of December 31, 2017, for Fingertips, Inc.? (Round your answer
to two decimals.)
A) 0.30
B) 0.39
C) 0.48
D) 0.81
Kapital, Inc. has prepared the operating budget for the first quarter of the year. The
company forecast sales of $45,000 in January, $55,000 in February, and $65,000 in
March. Variable and fixed selling and administrative expenses are as follows:
Variable Expenses: Power cost (20% of sales)
Miscellaneous expenses: (10% of sales)
Fixed Expenses: Salary expense: $6,000 per month
Salaries expense: $5,000 per month
Depreciation expense: $1,400 per month
Power cost/fixed portion: $600 per month
Miscellaneous expenses/fixed portion: $1,200 per month
Calculate total selling and administrative expenses for the month of January.
A) $27,700
B) $33,700
C) $13,500
D) $30,700
Landmark Prints is considering an investment in new equipment costing $502,000. The
equipment will be depreciated on a straight-line basis over a five-year life and is
expected to generate net cash inflows of $122,000 the first year, $158,000 the second
year, and $160,000 every year thereafter until the fifth year. What is the payback period
for this investment? The residual value is zero. (Round your answer to two decimal
places.)
A) 4.30 years
B) 3.39 years
C) 2.80 years
D) 3.11 years
When a periodic inventory system is used, ________.
A) an adjusting entry is needed to record the ending Merchandise Inventory account
balance
B) the process for closing the Income Summary and Dividends accounts differs from
the process used in the perpetual inventory system
C) beginning Inventory, Purchases, and Freight In accounts are closed via the Income
Summary Account
D) there is no need to take a physical count of inventory
Days’ sales in receivables measures ________.
A) how many days it takes to order and receive inventory
B) how many days it takes to collect the average level of accounts receivable
C) how many days it takes to sell inventory
D) the number of times a company collects the average accounts receivable balance in
one year
A summary of significant accounting policies and explanations of specific items on the
financial statements are included in ________.
A) the balance sheet
B) the income statement
C) the notes to financial statements
D) the report of the independent registered public accounting firm
For the year ending December 31, 2017, Rodgers Electric expects net cash provided by
operations of $328,000, net cash used by investing activities of $141,000, and net cash
provided by financing activities of $50,000. Rodgers plans to spend $259,000 to add a
warehouse for its operations and pays $35,000 in cash dividends. What is the amount of
free cash flow?
A) $237,000
B) $34,000
C) $69,000
D) $(72,000)
While preparing the budgeted income statement of a merchandising company, the
amount of cost of goods sold can be taken from the ________.
A) budgeted balance sheet
B) budgeted cash flow statement
C) inventory, purchases, and cost of goods sold budget
D) capital expenditures budget
Identify the breakeven point in the graph given below.
A) O
B) B
C) E
D) D
Amounts earned from delivering goods or services to customers are called ________.
A) notes receivable
B) unearned revenues
C) equity
D) revenues
Haddows, Inc. completed Job GH6 last month. The cost details of GH6 are shown
below.
Calculate the cost per unit of the finished product of Job GH6. (Round your answer to the
nearest cent.)
A) $2,127.00
B) $12.10
C) $75.10
D) $77.90
Which of the following inventory valuation methods minimizes income tax expense
during a period of rising inventory costs?
A) first-in, first-out
B) last-in, first-out
C) weighted-average
D) specific identification
Regarding the use of a spreadsheet for the preparation of the statement of cash flows,
which of the following statements is incorrect?
A) The spreadsheet starts with the beginning balance sheet and concludes with the
ending balance sheet.
B) When companies face complex situations, a spreadsheet can help in preparing the
statement of cash flows.
C) The spreadsheet cannot be used for the direct method.
D) Accountants can prepare the statement of cash flows directly from the lower part of
the spreadsheet.
Just-in-time costing is also known as ________.
A) job costing
B) batch costing
C) backflush costing
D) process costing
Haskins Products sells 2,100 kayaks per year at a sales price of $450 per unit. Haskins
sells in a highly competitive market and uses target pricing. The company has
calculated its target full product cost at $740,000 per year. Total variable costs are
$330,000 per year and cannot be reduced. Assume all products produced are sold. What
are the target fixed costs?
A) $945,000
B) $205,000
C) $330,000
D) $410,000
Popeye’s, a local convenience store, sells soft drinks. It sells two large drinks for every
small drink. A large drink sells for $3.00 with a variable cost of $0.80. A small drink
sells for $1.00 with a variable cost of $0.50. The weighted average contribution margin
is ________. (Round any intermediate calculations and your final answer to the nearest
cent.)
A) $1.35 per drink
B) $4.90 per drink
C) $1.63 per drink
D) $2.20 per drink
The production cost reports show the calculations for the physical flows and the
________ flows of the products.
A) cash
B) price
C) cost
D) supply
Darwin Company sells glass vases at a wholesale price of $4.50 per unit. The variable
cost to manufacture is $1.75 per unit. The monthly fixed costs are $8,500. Its current
sales are 29,000 units per month. If the company wants to increase its operating income
by 20%, how many additional units must it sell? (Round any intermediate calculations
to two decimal places and your final answer to the nearest whole number.)
A) 130,500 glass vases
B) 8,500 glass vases
C) 34,182 glass vases
D) 5,182 glass vases
The amount of accumulated depreciation for the budgeted balance sheet can be
obtained from the ________.
A) cash budget
B) selling and administrative expense budget and the prior balance sheet
C) cash payments for selling and administrative expense budget
D) financial budget
In a perpetual inventory system, when cash sales are recorded, ________.
A) merchandise inventory decreases and cost of goods sold decreases
B) sales revenue increases and cash decreases
C) sales revenue increases and cost of goods sold decreases
D) merchandise inventory decreases and cost of goods sold increases
An accounting information system is said to have good control characteristics, if it
________.
A) works smoothly with the business’s employees and organizational structure
B) safeguards a business’s assets and reduces the likelihood of fraud and errors
C) provides information that will improve decision making and reduce uncertainty
D) accommodates changes in the business over time
Luca was a professional classical guitar player until a motorcycle accident left him
disabled. After long months of therapy, he hired an experienced luthier and started a
small shop to make and sell Spanish guitars. The guitars sell for $700, and the fixed
monthly operating costs are as follows:
Luca’s accountant told him about contribution margin ratios, and Luca understood clearly
that for every dollar of sales, $0.60 went to cover his fixed costs, and anything above that
point was profit.
Luca is planning to increase the sales price to $750. What impact will the increase in sales
price have on the contribution margin ratio?
A) It will stay the same.
B) It will increase to 53.33%.
C) It will increase to approximately 62.67%.
D) It will decrease to approximately 49.33%.
Which of the following is irrelevant when deciding to upgrade a company’s heating and
air conditioning system?
A) the energy efficiency of the old equipment versus the energy efficiency of the new
equipment
B) the safety of the new equipment compared to the old equipment
C) the purchase price of the old equipment compared to the purchase price of the new
equipment
D) the productivity of the old equipment compared to that of the new equipment
