1) kerson corporation’s most recent balance sheet and income statement appear below:
required:
compute the following for year 2:
a. times interest earned.
b. debt-to-equity ratio.
2) the most recent balance sheet and income statement of teramoto corporation appear
below:
cash dividends were $18.
the net cash provided by (used by) investing activities for the year was:
a.$77
b.($92)
c.$92
d.($77)
3) derflinger corporation reported the following data for the month of january:
the cost of goods manufactured for january was:
a.$176,000
b.$172,000
c.$175,000
d.$177,000
4) altona corporation’s vice president in charge of marketing believes that every 3%
increase in the selling price of one of the company’s products would lead to a 5%
decrease in the product’s total unit sales. the product’s absorption costing unit product
cost is $13.50. the variable production cost is $7.80 per unit and the variable selling and
administrative cost is $2.30 per unit.
the product’s profit-maximizing price according to the formula in the text is closest to:
a.$31.86
b.$23.84
c.$5.43
d.$18.41
5) grodin catering uses activity-based costing for its overhead costs. the company has
provided the following data concerning the activity rates in its activity-based costing
system:
the number of meals served is the measure of activity for the preparing meals activity
cost pool. the number of functions catered is used as the activity measure for the
arranging functions activity cost pool.
management would like to know whether the company made any money on a recent
function at which 180 meals were served. the company catered the function for a fixed
price of $15.00 per meal. the cost of the raw ingredients for the meals was $65 per
meal. this cost is in addition to the costs of wages, supplies, and other expenses detailed
above.
for the purposes of preparing action analyses, management has assigned ease of
adjustment codes to the costs as follows: wages are classified as a yellow cost; supplies
and raw ingredients as a green cost; and other expenses as a red cost.
suppose an action analysis report is prepared for the function mentioned above. what
would be the “red margin” in the action analysis report? (round to the nearest whole
dollar.)
a.$231
b.$381
c.$131
d.$81
6) fagin company’s quality cost report is to be based on the following data:
what would be the total appraisal cost appearing on the quality cost report?
a.$216,000
b.$78,000
c.$150,000
d.$97,000
7) (ignore income taxes in this problem.) the management of lassonde corporation is
considering the purchase of a machine that would cost $290,000, would last for 9 years,
and would have no salvage value. the machine would reduce labor and other costs by
$56,000 per year. the company requires a minimum pretax return of 8% on all
investment projects.
the net present value of the proposed project is closest to:
a.$59,832
b.$119,604
c.$214,000
d.$107,053
8) finestra corporation produces a single product that it currently sells for $10. fixed
expenses are $120,000 for the year and variable expenses are $6 per unit. in addition,
finestra’s salespersons are paid a commission of 10% of their sales.
if finestra spends an additional $10,000 on advertising, increases its selling price to $12
per unit, and sells 60,000 units, its net operating income would be:
a.$158,000
b.$230,000
c.$218,000
d.$194,000
9) curd corporation has provided the following data concerning its most important raw
material, compound j33x:
when recording the use of materials in production, raw materials would be:
a.debited for $41,417
b.credited for $41,417
c.debited for $38,922
d.credited for $38,922
10) the vega division of ace company makes wheels which can either be sold to outside
customers or transferred to the walsh division of ace company. last month the walsh
division bought all 4,000 of its wheels from the vega division for $42 each. the
following data are available from last month’s operations for the vega company:
if the vega division sells wheels to the walsh division, vega can avoid $2 per wheel in
sales commissions. an outside supplier has offered to supply wheels to the walsh
division for $41 each.
suppose that the vega division has ample idle capacity so that transfers to the walsh
division would not cut into its sales to outside customers. what should be the lowest
acceptable transfer price from the perspective of the vega division?
a.$28
b.$30
c.$42
d.$45
11) the clemson company reported the following results last year for the manufacture
and sale of one of its products known as a tam.
clemson company is trying to determine whether or not to discontinue the manufacture
and sale of tams. the operating results reported above for last year are expected to
continue in the foreseeable future if the product is not dropped. the fixed manufacturing
overhead represents the costs of production facilities and equipment that the tam
product shares with other products produced by clemson. if the tax product were
dropped, there would be no change in the fixed manufacturing costs of the company.
assume that discontinuing the manufacture and sale of tams will have no effect on the
sale of other product lines. if the company discontinues the tam product line, the change
in annual operating income (or loss) should be:
a.$55,000 decrease
b.$65,000 decrease
c.$90,000 decrease
d.$70,000 increase