1) the accounts receivable balance that would appear in the march 31 budgeted balance
sheet would be:
a.$15,000
b.$16,000
c.$8,800
d.$12,400
2) lavell corporation reported the following data for the month of february:
the total manufacturing cost for february was:
a.$174,000
b.$171,000
c.$70,000
d.$108,000
3) littau inc. has provided the following data concerning an investment project that has
been proposed:
the company’s tax rate is 30%. for tax purposes, the entire initial investment will be
depreciated over 7 years without any reduction for salvage value. the company uses a
discount rate of 19%.
when computing the net present value of the project, what is the after-tax cash flow
from the salvage value in the final year?
a.$0
b.$3,000
c.$10,000
d.$7,000
4) ross company produces a single product. the company has direct materials costs of
$8 per unit, direct labor costs of $6 per unit, and manufacturing overhead of $10 per
unit. sixty percent of the manufacturing overhead is for fixed costs. in addition, variable
selling and administrative costs are $2 per unit, and fixed selling and administrative
costs are $3 per unit at the current activity level. assume that direct labor is a variable
cost.
under variable costing, the unit product cost is:
a.$24
b.$20
c.$18
d.$21
5) the standard direct labor-hours per unit should be:
a.0.88
b.1.03
c.0.73
d.0.82
6) (ignore income taxes in this problem.) grimmett company is considering purchasing
a machine that would cost $403,200 and have a useful life of 9 years. the machine
would reduce cash operating costs by $74,667 per year. the machine would have a
salvage value of $60,480 at the end of the project.
required:
a. compute the payback period for the machine.
b. compute the simple rate of return for the machine.
7) libbee corporation is presently making part i50 that is used in one of its products. a
total of 8,000 units of this part are produced and used every year. the company’s
accounting department reports the following costs of producing the part at this level of
activity:
an outside supplier has offered to produce and sell the part to the company for $24.50
each. if this offer is accepted, the supervisor’s salary and all of the variable costs,
including direct labor, can be avoided. the special equipment used to make the part was
purchased many years ago and has no salvage value or other use. the allocated general
overhead represents fixed costs of the entire company, none of which would be avoided
if the part were purchased instead of produced internally.
in addition to the facts given above, assume that the space used to produce part i50
could be used to make more of one of the company’s other products, generating an
additional segment margin of $24,000 per year for that product. what would be the
impact on the company’s overall net operating income of buying part i50 from the
outside supplier and using the freed space to make more of the other product?
a.net operating income would increase by $24,000 per year
b.net operating income would increase by $17,600 per year
c.net operating income would decline by $8,800 per year
d.net operating income would decline by $30,400 per year
8) the stacy company makes and sells a single product, product r. budgeted sales for
april are $300,000. gross margin is budgeted at 30% of sales dollars. if the net income
for april is budgeted at $40,000, the budgeted selling and administrative expenses are:
a.$133,333
b.$50,000
c.$102,000
d.$78,000
* solve backwards for this figure: $90,000 – $40,000 = $50,000
noskey corporation is a merchandising firm. information pertaining to the company’s
sales revenue is presented in the following table.
9) feiner clinic uses client-visits as its measure of activity. during december, the clinic
budgeted for 2,200 client-visits, but its actual level of activity was 2,220 client-visits.
the clinic has provided the following data concerning the formulas to be used in its
budgeting:
the activity variance for administrative expenses in december would be closest to:
a.$8 f
b.$162 f
c.$162 u
d.$8 u
10) in the preparation of a statement of cash flows, all of the following would be
classified as financing activities except:
a.the conversion of the company’s own preferred stock into common stock
b.the declaration and payment of a cash dividend on the company’s own common stock
c.the repayment of principal on a mortgage
d.the sale of the company’s own preferred stock for cash
11) wintersmith corporation estimates that its variable manufacturing overhead is
$11.60 per machine-hour and its fixed manufacturing overhead is $278,124 per period.
if the denominator level of activity is 4,200 machine-hours, the fixed element in the
predetermined overhead rate would be:
a.$11.60
b.$1,160.00
c.$66.22
d.$77.82
12) jessep corporation has a standard cost system in which manufacturing overhead is
applied on the basis of standard direct labor-hours. the company has provided the
following data concerning its fixed manufacturing overhead costs in march:
the fixed manufacturing overhead volume variance is:
a.$3,000 u
b.$3,000 f
c.$9,000 u
d.$6,000 u
13) manago corporation manufactures and sells a single product. the company uses
units as the measure of activity in its budgets and performance reports. during march,
the company budgeted for 5,300 units, but its actual level of activity was 5,310 units.
the company has provided the following data concerning the formulas to be used in its
budgeting:|
the direct materials in the flexible budget for march would be closest to:
a.$73,278
b.$73,929
c.$73,140
d.$74,208
14) a favorable materials price variance coupled with an unfavorable material usage
variance would most likely result from:
a.problems with processing machines
b.the purchase of low quality materials
c.problems with labor efficiency
d.changes in the product mix
15) mcgarey inc. has provided the following data for the month of november. there
were no beginning inventories; consequently, the direct materials, direct labor, and
manufacturing overhead applied listed below are all for the current month.
manufacturing overhead for the month was underapplied by $12,000.
the company allocates any underapplied or overapplied overhead among work in
process, finished goods, and cost of goods sold at the end of the month on the basis of
the overhead applied during the month in those accounts.
the journal entry to record the allocation of any underapplied or overapplied overhead
for november would include the following:
a.debit to work in process of $8,720
b.debit to work in process of $480
c.credit to work in process of $480
d.credit to work in process of $8,720
16) community general hospital has a food services department that provides meals for
all patients in the hospital. budgeted and actual meals served for the month just ended
are:
the budgeted variable cost of meals for the month just ended was $100,000; the actual
variable cost of meals for the month was $130,000.
how much of the $130,000 actual food services cost for the month just completed
should be kept in the food services department and not charged to the other
departments?
a.$30,000
b.$5,000
c.$4,000
d.$0
17) the following financial data have been taken from the records of cpz enterprises.
the current ratio for cpz enterprises is:
a.1.68
b.2.14
c.5.00
d.5.29