1) Gabbert 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.$95,200
B.$156,400
C.$6,800
D.$107,600
2) The income tax expense in year 2 is:
A.$27,000
B.$12,000
C.$126,000
D.$87,000
3) Gilson Corporation manufactures and sells a single product. The company uses units
as the measure of activity in its budgets and performance reports. During April, the
company budgeted for 5,100 units, but its actual level of activity was 5,060 units. The
company has provided the following data concerning the formulas used in its budgeting
and its actual results for April:
Data used in budgeting:
Actual results for April:
The revenue variance for April would be closest to:
A.$3,926 U
B.$2,490 U
C.$3,926 F
D.$2,490 F
4) Sarter Corporation is in the process of preparing its annual budget. The following
beginning and ending inventory levels are planned for the year.
Each unit of finished goods requires 3 grams of raw material. The company plans to sell
880,000 units during the year.
The number of units the company would have to manufacture during the year would be:
A.900,000 units
B.930,000 units
C.880,000 units
D.830,000 units
5) The TS Corporation has budgeted sales for the year as follows:
The ending inventory of finished goods for each quarter should equal 25% of the next
quarter’s budgeted sales in units. The finished goods inventory at the start of the year is
2,500 units. Four pounds of raw materials are required for each unit produced. Raw
materials on hand at the start of the year total 4,200 pounds. The raw materials
inventory at the end of each quarter should equal 10% of the next quarter’s production
needs in material.
Scheduled production for the third quarter should be:
A.14,500 units
B.18,500 units
C.15,500 units
D.13,500 units
6) During the year the balance in the Accounts Receivable account increased by $6,000.
In order to adjust the company’s net income to a cash basis using the direct method on
the statement of cash flows, it would be necessary to:
A.subtract the $6,000 from the sales revenue reported on the income statement.
B.add the $6,000 to the sales revenue reported on the income statement.
C.subtract the $6,000 from the cost of goods sold reported on the income statement.
D.add the $6,000 to the cost of goods sold reported on the income statement.
7) If every 10% increase in price leads to a 14% decrease in quantity sold, the
profit-maximizing price is closest to:
A.$84.50
B.$124.25
C.$120.90
D.$117.91
8) The following are budgeted data:
One pound of material is required for each finished unit. The inventory of materials at
the end of each month should equal 20% of the following month’s production needs.
Purchases of raw materials for February would be budgeted to be:
A.19,000 pounds
B.19,200 pounds
C.23,000 pounds
D.18,800 pounds
9) Saffold Corporation has provided the following data for December.
The volume variance for December is:
A.$6,540 F
B.$6,540 U
C.$16,350 F
D.$16,350 U
10) Sosinski Corporation has two divisions: Domestic Division and Foreign Division.
The following data are for the most recent operating period:
The common fixed expenses have been allocated to the divisions on the basis of sales.
The Foreign Division’s break-even sales is closest to:
A.$160,294
B.$275,794
C.$466,116
D.$214,029
11) For the past year, Allargando Company recorded sales of $500,000 and average
operating assets of $250,000. What is the margin that Allargando Company needed to
earn in order to achieve an ROI of 12%?
A.6.00%
B.12.00%
C.2.00%
D.8.33%
12) The following entry would be used to record depreciation on manufacturing
equipment:
13) The Bolton Company operates a Health Care service department for its employees.
The variable costs of this department are charged to the company’s two operating
departments, Assembly and Finishing, based on the number of employees in each
department. The Health Care Department’s total variable cost was budgeted at $55,000
for the past year; its actual total variable cost was $56,112. Additional data for the past
year follow:
How much Health Care variable cost should be charged to Assembly for performance
evaluation purposes at the end of the year?
A.$33,000
B.$33,600
C.$33,440
D.$34,048
14) The company’s average sale period (turnover in days) for Year 2 is closest to:
A.91.9 days
B.48.9 days
C.90.1 days
D.198.1 days