1) the management of fanton corporation is considering introducing a new producta
compact lawn blower. at a selling price of $38 per unit, management projects sales of
60,000 units. the lawn blower would require an investment of $500,000. the desired
return on investment is 18%.
the desired profit according to the target costing calculations is:
a.$410,400
b.$2,190,000
c.$2,280,000
d.$90,000
2) glasner corporation bases its predetermined overhead rate on variable manufacturing
overhead cost of $2.70 per machine-hour and fixed manufacturing overhead cost of
$289,784 per period. if the denominator level of activity is 8,800 machine-hours, the
variable element in the predetermined overhead rate would be:
a.$2.70
b.$35.63
c.$35.26
d.$32.93
3) a manufacturer of playground equipment has a standard costing system based on
standard direct labor-hours (dlhs) as the measure of activity. data from the company’s
flexible budget for manufacturing overhead are given below:
the following data pertain to operations for the most recent period:
how much fixed manufacturing overhead was applied to products during the period to
the nearest dollar?
a.$59,210
b.$59,907
c.$61,120
d.$58,110
4) mire corporation staffs a helpline to answer questions from customers. the costs of
operating the helpline are variable with respect to the number of calls in a month. at a
volume of 29,000 calls in a month, the costs of operating the helpline total $171,100.
to the nearest whole cent, what should be the average cost of operating the helpline per
call at a volume of 27,500 calls in a month? (assume that this call volume is within the
relevant range.)
a.$5.48
b.$5.90
c.$6.22
d.$6.06
5) bello corporation produces and sells two products. in the most recent month, product
d99p had sales of $33,000 and variable expenses of $15,840. product g71p had sales of
$42,000 and variable expenses of $4,410. the fixed expenses of the entire company
were $49,790.
if the sales mix were to shift toward product d99p with total sales remaining constant,
the overall break-even point for the entire company:
a.would not change.
b.would increase.
c.could increase or decrease.
d.would decrease.
6) the culver company is preparing its manufacturing overhead budget for the third
quarter of the year. budgeted variable factory overhead is $3.00 per unit produced;
budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount
being factory depreciation.
if the budgeted production for july is 6,000 units, then the total budgeted factory
overhead for july is:
a.$77,000
b.$82,000
c.$85,000
d.$93,000
7) the ferris company applies manufacturing overhead costs to products on the basis of
standard direct labor-hours. the standard cost card shows that 3 direct labor-hours are
required per unit of product. for august, the company budgeted to work 90,000 direct
labor-hours and to incur the following total manufacturing overhead costs:
during august, the company completed 28,000 units of product, worked 86,000 direct
labor-hours, and incurred the following total manufacturing overhead costs:
the denominator activity in the predetermined overhead rate is 90,000 direct
labor-hours.
for august, the variable overhead efficiency variance is:
a.$1,800 f
b.$0
c.$2,200 u
d.$2,200 f
8) mccubbin corporation is considering two alternatives: a and b. costs associated with
the alternatives are listed below:
what is the differential cost of alternative b over alternative a, including all of the
relevant costs?
a.$161,000
b.$131,500
c.$59,000
d.$102,000
9) fowler company manufactures a single product. operating data for the company and
its absorption costing income statements for the last two years are presented below:
variable manufacturing costs are $6 per unit. fixed manufacturing overhead totals
$72,000 in each year. this overhead is applied at the rate of $4 per unit. variable selling
and administrative expenses are $2 per unit sold.
required:
a. what was the unit product cost in each year under variable costing?
b. prepare new income statements for each year using variable costing.
c. reconcile the absorption costing and variable costing net operating income for each
year.
10) van cleef company’s comparative balance sheet and income statement for last year
appear below:
the company declared and paid $18,000 in cash dividends during the year. the company
uses the direct method to determine the net cash provided by operating activities.
on the statement of cash flows, the operating expenses adjusted to a cash basis would
be:
a.$200,000
b.$251,000
c.$191,000
d.$149,000
11) dilloo company uses an activity-based costing system with three activity cost pools.
the company has provided the following data concerning its costs and its activity based
costing system:
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs.
you have been asked to complete the first-stage allocation of costs to the activity cost
pools.
how much cost, in total, should not be allocated to orders and products in the second
stage of the allocation process if the activity-based costing system is used for internal
decision-making?
a.$80,000
b.$132,000
c.$0
d.$66,000
12) deskin corporation uses residual income to evaluate the performance of its
divisions. the company’s minimum required rate of return is 19%. in february, the
commercial products division had average operating assets of $780,000 and net
operating income of $139,800. what was the commercial products division’s residual
income in february?
a.-$8,400
b.-$26,562
c.$8,400
d.$26,562
13) the following data have been provided by letze corporation from its activity-based
costing accounting system:
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products.
how much factory supervision and indirect factory labor cost would be assigned to the
batch set-up activity cost pool?
a.$680,000
b.$385,000
c.$391,000
d.$340,000
14) two alternatives, code-named x and y, are under consideration at donat corporation.
costs associated with the alternatives are listed below.
what is the differential cost of alternative y over alternative x, including all of the
relevant costs?
a.$140,000
b.$123,000
c.$34,000
d.$106,000