1) The average collection period for Year 2 is closest to:
A.64.0 days
B.0.9 days
C.61.3 days
D.1.1 days
2) Hal currently works as the fry guy at Burger Haven but is thinking of quitting his job
to attend college full time next semester. Which of the following would be considered
an opportunity cost of attending college?
A.the cost of the textbooks
B.the cost of the cola that Hal will consume during class
C.Hal’s lost wages at Burger Haven
D.the cost of commuting to the Burger Haven job
3) Green Hornet Corporation is contemplating the introduction of a new product. The
company has gathered the following information concerning the product:
The company uses the absorption costing approach to cost-plus pricing as described in
the text.
Required:
a. Compute the markup on absorption cost.
b. Compute the selling price.
4) In April, one of the processing departments at Salatino Corporation had beginning
work in process inventory of $27,000 and ending work in process inventory of $36,000.
During the month, the cost of units transferred out from the department was $261,000.
The company uses the FIFO method in its process costing system.
In the department’s cost reconciliation report for April, the costs added to production in
the department would be:
A.$270,000
B.$225,000
C.$252,000
D.$234,000
5) Florea Corporation has provided the following data concerning its most important
raw material, compound K09B:
The raw material was purchased on account.
The Materials Quantity Variance for August would be recorded as a:
A.Credit of $24,910
B.Credit of $1,060
C.Debit of $1,060
D.Debit of $24,910
6) Towne Snow Removal’s cost formula for its vehicle operating cost is $1,470 per
month plus $399 per snow-day. For the month of November, the company planned for
activity of 13 snow-days, but the actual level of activity was 9 snow-days. The actual
vehicle operating cost for the month was $5,230. The vehicle operating cost in the
flexible budget for November would be closest to:
A.$6,657
B.$5,230
C.$4,609
D.$5,061
7) Suski Corporation has a standard cost system in which it applies manufacturing
overhead to products on the basis of standard machine-hours (MHs). The company has
provided the following data for the most recent month:
What was the variable overhead rate variance for the month?
A.$1,500 Favorable
B.$590 Unfavorable
C.$910 Favorable
D.$1,000 Unfavorable
8) Lynne 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 $480 per
month plus $91 per job plus $14 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 June to be 10 jobs and 79 meals, but the actual activity was 14 jobs and 77
meals. The actual cost for catering supplies in June was $2,970. The catering supplies in
the flexible budget for June would be closest to:
A.$2,496
B.$2,970
C.$2,832
D.$3,494
9) Assume a company sells a single product. If Q equals the level of output, P is the
selling price per unit, V is the variable expense per unit, and F is the fixed expense, then
the break-even point in sales dollars is:
A.F/(P-V).
B.F/[Q(P-V)].
C.F/[Q(P-V)/P].
D.F/[(P-V)/P].
10) Gilder Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in June.
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 variable overhead efficiency variance for June is:
A.$240 U
B.$216 U
C.$240 F
D.$216 F
11) Novelli Corporation makes a product whose variable overhead standards are based
on direct labor-hours. The quantity standard is 0.6 hours per unit. The variable overhead
rate standard is $5.00 per hour. In September the company produced 1,600 units using
950 direct labor-hours. The actual variable overhead rate was $5.10 per hour.
The variable overhead rate variance for September is:
A.$95 F
B.$96 U
C.$95 U
D.$96 F
12) Farnsworth Television makes and sells portable television sets. Each television
regularly sells for $200. The following cost data per television are based on a full
capacity of 12,000 televisions produced each period:
A special order has been received by Farnsworth for a sale of 2,500 televisions to an
overseas customer. The only selling costs that would be incurred on this order would be
$10 per television for shipping. Farnsworth is now selling 7,200 televisions through
regular distributors each period. What should be the minimum selling price per
television in negotiating a price for this special order?
A) $200
B) $166
C) $178
D) $176
13) ( Crowley Corporation is considering three investment projects: F, G, and H. Project
F would require an investment of $21,000, Project G of $49,000, and Project H of
$82,000. No other cash outflows would be involved. The present value of the cash
inflows would be $21,210 for Project F, $57,820 for Project G, and $95,120 for Project
H. Rank the projects according to the profitability index, from most profitable to least
profitable.
A.F, H, G
B.G, H, F
C.H, F, G
D.H, G, F
14) Bullinger Corporation has provided the following data concerning an investment
project that it is considering:
The net present value of the project is closest to:
A.$93,000
B.$406,326
C.$(63,674)
D.$(79,658)
15) Hache Corporation uses the weighted-average method in its process costing system.
Data concerning the first processing department for the most recent month are listed
below:
Note: Your answers may differ from those offered below due to rounding error. In all
cases, select the answer that is the closest to the answer you computed. To reduce
rounding error, carry out all computations to at least three decimal places.
What are the equivalent units for conversion costs for the month in the first processing
department?
A.5,900
B.4,400
C.4,850
D.450
16) You have just been hired as the new executive assistant to the manager of the
Eastern Division of Global Manufacturing. You have been given the following
incomplete records concerning manufacturing overhead for last year:
The company uses a standard cost system in which manufacturing overhead costs are
applied to products on the basis of standard direct labor-hours (DLHs).
Required:
a. Compute the variable overhead rate variance and indicate whether it was favorable or
unfavorable.
b. Compute the fixed overhead volume variance and indicate whether it was favorable
or unfavorable.