1) Crumbley Inc. produces and sells two products. Data concerning those products for
the most recent month appear below:
Fixed expenses for the entire company were $42,760.
Required:
a. Determine the overall break-even point for the company in total sales dollars. Show
your work!
b. If the sales mix shifts toward Product W43J with no change in total sales, what will
happen to the break-even point for the company? Explain.
2) Sulema, Inc. repairs and refinishes antique furniture. Manufacturing overhead at
Sulema is applied to production on the basis of standard direct labor-hours. Which
overhead variance(s) at Sulema would be unfavorably affected if the cost of solvents
used to strip the old paint from the furniture unexpectedly doubles in price?
A.variable overhead rate variance
B.variable overhead efficiency variance
C.fixed manufacturing overhead budget variance
D.fixed manufacturing overhead volume variance
3) The company’s total asset turnover for Year 2 is closest to:
A.1.17
B.11.04
C.0.09
D.0.85
Total asset turnover = Sales Average total assets*
= $1,450,000 $1,243,000 = 1.17 (rounded)
*Average total assets = ($1,236,000 + $1,250,000) 2 = $1,243,000
Mahoe Corporation has provided the following financial data:
Dividends on common stock during Year 2 totaled $500. The market price of common
stock at the end of Year 2 was $8.06 per share.
4) The net cash provided by (used in) financing activities for the year was:
A.$(42)
B.$3
C.$11
D.$(28)
Kilduff Corporation’s balance sheet and income statement appear below:
5) Koutz Corporation uses activity-based costing to compute product margins.
Overhead costs have already been allocated to the company’s three activity cost
pools-Processing, Supervising, and Other. The costs in those activity cost pools appear
below:
Processing costs are assigned to products using machine-hours (MHs) and Supervising
costs are assigned to products using the number of batches. 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 Processing and Supervising costs
to determine product margins.
What is the overhead cost assigned to Product O7 under activity-based costing?
A.$32,129
B.$36,289
C.$4,160
D.$47,000
6) Beakins Corporation produces a single product. The standard cost card for the
product follows:
During a recent period the company produced 1,200 units of product. Various costs
associated with the production of these units are given below:
The company records all variances at the earliest possible point in time. Variable
manufacturing overhead costs are applied to products on the basis of standard direct
labor-hours.
The materials quantity variance for the period is:
A.$950 U
B.$5,000 F
C.$1,000 U
D.$6,000 F
7) 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 materials price variance for June is:
A.$4,410 F
B.$4,410 U
C.$4,180 U
D.$4,180 F
8) Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs.
Expected mug sales at Fab (in units) for the next three months are as follows:
Fab likes to maintain a finished goods inventory equal to 30% of the next month’s
estimated sales. How many mugs should Fab plan on producing during the month of
November?
A.23,200 mugs
B.26,800 mugs
C.25,900 mugs
D.34,300 mugs
9) The inventory turnover for Year 2 is closest to:
A.0.92
B.6.50
C.1.08
D.6.24
10) A company that makes organic fertilizer has supplied the following data:
The company’s unit contribution margin is closest to:
A.$4.10 per unit
B.$3.80 per unit
C.$4.55 per unit
D.$7.15 per unit
11) Duerr Corporation uses an activity-based costing system with three activity cost
pools. The company has provided the following data concerning its costs:
The distribution of resource consumption across the three activity cost pools is given
below:
How much cost, in total, would be allocated in the first-stage allocation to the Order
Processing activity cost pool?
A.$250,000
B.$286,000
C.$156,000
D.$312,000
12) If the company bases its predetermined overhead rate on capacity, by how much
was manufacturing overhead underapplied or overapplied?
The management of Wray Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity. The company’s controller
has provided an example to illustrate how this new system would work. In this
example, the allocation base is machine-hours and the estimated amount of the
allocation base for the upcoming year is 68,000 machine-hours. In addition, capacity is
79,000 machine-hours and the actual level of activity for the year is 63,500
machine-hours. All of the manufacturing overhead is fixed and is $3,384,360 per year.
For simplicity, it is assumed that this is the estimated manufacturing overhead for the
year as well as the manufacturing overhead at capacity. It is further assumed that this is
also the actual amount of manufacturing overhead for the year.
A.$664,020 Underapplied
B.$223,965 Overapplied
C.$664,020 Overapplied
D.$223,965 Underapplied
13) Sawit Corporation, a manufacturer of woodworking tools, wants to introduce a new
power screwdriver. To compete effectively, the screwdriver cannot be priced at more
than $14. The company requires a 15% rate of return on investment on all new
products. In order to produce and sell 80,000 screwdrivers each year, the company will
need to make an investment of $800,000. The target cost per screwdriver would be:
A.$15.50
B.$1.50
C.$14.00
D.$12.50
14) Rawdon Corporation’s net operating income in Year 2 was $52,429, net income
before taxes was $34,429, and the net income was $24,100. Total common stock was
$360,000 at the end of both Year 2 and Year 1. The par value of common stock is $4 per
share. The company’s total stockholders’ equity at the end of Year 2 amounted to
$976,000 and at the end of Year 1 to $960,000. The company’s earnings per share for
Year 2 is closest to:
A.$0.58 per share
B.$0.38 per share
C.$0.27 per share
D.$5.84 per share