1) Munar Corporation uses activity-based costing to compute product margins.
Overhead costs have already been allocated to the company’s three activity cost
pools-Machining, Order Filling, and Other. The costs in those activity cost pools appear
below:
Machining costs are assigned to products using machine-hours (MHs) and Order Filling
costs are assigned to products using the number of orders. The costs in the Other
activity cost pool are not assigned to products. Activity data appear below:
Finally, sales and direct cost data are combined with Machining and Order Filling costs
to determine product margins.
The activity rate for the Order Filling activity cost pool under activity-based costing is
closest to:
A.$1.00 per order
B.$1.11 per order
C.$15.70 per order
D.$27.00 per order
2) Qabar Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
Required:
a. What is the unit product cost for the month under variable costing?
b. Prepare a contribution format income statement for the month using variable costing.
c. Without preparing an income statement, determine the absorption costing net
operating income for the month. (Hint: Use the reconciliation method.)
3) Glassing Clinic uses client-visits as its measure of activity. During September, the
clinic budgeted for 3,700 client-visits, but its actual level of activity was 3,660
client-visits. The clinic has provided the following data concerning the formulas to be
used in its budgeting:
The activity variance for net operating income in September would be closest to:
A.$380 U
B.$3,540 U
C.$3,540 F
D.$380 F
4) Federick Clinic uses client-visits as its measure of activity. During October, the clinic
budgeted for 3,000 client-visits, but its actual level of activity was 3,040 client-visits.
The clinic has provided the following data concerning the formulas used in its
budgeting and its actual results for October:
Data used in budgeting:
Actual results for October:
The personnel expenses in the planning budget for October would be closest to:
A.$91,624
B.$87,314
C.$86,165
D.$90,900
5) Cervetti Corporation has two major business segments-East and West. In July, the
East business segment had sales revenues of $220,000, variable expenses of $125,000,
and traceable fixed expenses of $29,000. During the same month, the West business
segment had sales revenues of $890,000, variable expenses of $472,000, and traceable
fixed expenses of $169,000. The common fixed expenses totaled $246,000 and were
allocated as follows: $123,000 to the East business segment and $123,000 to the West
business segment.
A properly constructed segmented income statement in a contribution format would
show that the segment margin of the East business segment is:
A.$125,000
B.$66,000
C.-$28,000
D.-$57,000
6) Privett Hospital bases its budgets on patient-visits. The hospital’s static planning
budget for November appears below:
Actual results for the month were:
The spending variance for occupancy costs in the flexible budget performance report
for the month is:
A.$160 U
B.$940 U
C.$940 F
D.$160 F
7) The Milham Corporation has two divisions–East and West. The divisions have the
following revenues and expenses:
Management at Milham is considering the elimination of the West Division. If the West
Division were eliminated, its traceable fixed costs could be avoided. Total common
corporate costs would be unaffected by this decision. Given these data, the elimination
of the West Division would result in an overall company net operating income of:
A) $100,000
B) $80,000
C) $120,000
D) $50,000
8) Oddo Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in December.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
The materials price variance for December is:
A.$2,520 U
B.$2,520 F
C.$2,900 F
D.$2,900 U
9) Aaker Corporation, which has only one product, has provided the following data
concerning its most recent month of operations:
The total gross margin for the month under the absorption costing approach is:
A.$98,100
B.$198,000
C.$72,000
D.$12,000
10) An increase in accounts receivable of $1,000 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 $1,000 in order to arrive at net cash provided by
operating activities.
B.a deduction from net income of $1,000 in order to arrive at net cash provided by
operating activities.
C.an addition of $1,000 under financing activities.
D.a deduction of $1,000 under financing activities.
11) Hochberg Corporation uses an activity-based costing system with the following
three activity cost pools:
The Other activity cost pool is used to accumulate costs of idle capacity and
organization-sustaining costs.
The company has provided the following data concerning its costs:
The distribution of resource consumption across activity cost pools is given below:
The activity rate for the Fabrication activity cost pool is closest to:
A.$5.30 per machine-hour
B.$3.60 per machine-hour
C.$7.20 per machine-hour
D.$4.80 per machine-hour
12) Zemlya Corporation currently records $4,000 of depreciation each year on the
computer that it uses for its major data processing needs. The computer currently has
one more year of useful life left and it will have a salvage value of zero at the end of
that year. Jennifer, one of the accountants at Zemlya, suggested that the computer be
sold immediately for $3,000 and that the company hire a data processing firm to handle
the corporation’s data processing needs. The computer currently requires $25,000 in
annual operating costs in addition to the depreciation. The data processing firm would
charge $10,000 per year for its services. If Zemlya decides to implement this change,
what effect will this have on the corporation’s net cash flow for the last year of the
computer’s useful life?
A.increase of $15,000
B.increase of $18,000
C.decrease of $22,000
D.decrease of $25,000
13) Ignoring any salvage value, to the nearest whole dollar how large would the annual
cash inflow have to be to make the investment in the equipment financially attractive?
A.$62,100
B.$23,542
C.$235,421
D.$47,084
14) Suppose the special order is for 4,000 haks this month. If this offer is accepted by
Molis, the company’s operating income for the month will:
A.increase by $6,000
B.decrease by $6,000
C.increase by $5,000
D.decrease by $5,000
15) The company’s current ratio is closest to:
A.0.47
B.0.40
C.0.19
D.4.25
16) Dus Catering uses two measures of activity, jobs and meals, in the cost formulas in
its budgets and performance reports. The cost formula for catering supplies is $400 per
month plus $89 per job plus $10 per meal. A typical job involves serving a number of
meals to guests at a corporate function or at a host’s home. The company expected its
activity in March to be 11 jobs and 81 meals, but the actual activity was 7 jobs and 76
meals. The actual cost for catering supplies in March was $1,810. The activity variance
for catering supplies in March would be closest to:
A.$406 U
B.$406 F
C.$379 F
D.$379 U
17) Excerpts from Aultman Corporation’s comparative balance sheet appear below:
Which of the following is the correct treatment within the operating activities section of
the statement of cash flows using the indirect method?
A.The change in Inventory is added to net income; The change in Accounts Payable is
added to net income
B.The change in Inventory is added to net income; The change in Accounts Payable is
subtracted from net income
C.The change in Inventory is subtracted from net income; The change in Accounts
Payable is added to net income
D.The change in Inventory is subtracted from net income; The change in Accounts
Payable is subtracted from net income
An increase in a current asset is subtracted from net income. A decrease in a current
liability is subtracted from net income.
18) If the new equipment is purchased, the present value of the annual cash operating
costs associated with this alternative is:
A.$(28,840)
B.$(19,160)
C.$(14,420)
D.$(36,050)
19) Granger Corporation had $180,000 in sales on account last year. The beginning
accounts receivable balance was $10,000 and the ending accounts receivable balance
was $18,000. The corporation’s average collection period was closest to:
A.20.3 days
B.28.4 days
C.36.5 days
D.56.8 days
20) Blackner Corporation produces and sells a single product. Data concerning that
product appear below:
The break-even in monthly unit sales is closest to:
A.3,290 units
B.6,991 units
C.4,173 units
D.2,237 units