1) the manufacturing overhead budget at waycaster corporation is based on budgeted
direct labor-hours. the direct labor budget indicates that 6,000 direct labor-hours will be
required in february. the variable overhead rate is $3.40 per direct labor-hour. the
company’s budgeted fixed manufacturing overhead is $81,600 per month, which
includes depreciation of $18,000. all other fixed manufacturing overhead costs
represent current cash flows.
the company recomputes its predetermined overhead rate every month. the
predetermined overhead rate for february should be:
a.$17.00
b.$13.60
c.$14.00
d.$3.40
2) the following information relates to poblano company for last year:
what is poblano’s price-earnings ratio for last year?
a.8
b.10
c.12.5
d.15.625
3) detmer enterprises has budgeted sales for the next five months as follows:
past experience has shown that the ending inventory for each month should be equal to
10% of the next month’s sales in units. the inventory on december 31 contained 400
units, which was in excess of the desired level of inventory. the company needs to
prepare a production budget for the first quarter of the year.
the total number of units to be produced in january is:
a.4,480 units
b.3,800 units
c.4,080 units
d.3,500 units
4) neuman company, which has only one product, has provided the following data
concerning its most recent month of operations:
the company produces the same number of units every month, although the sales in
units vary from month to month. the company’s variable costs per unit and total fixed
costs have been constant from month to month.
required:
a. prepare a contribution format income statement for the month using variable costing.
b. prepare an income statement for the month using absorption costing.
5) a company anticipates a taxable cash expense of $50,000 in year 2 of a project. the
company’s tax rate is 30% and its discount rate is 14%. the present value of this future
cash flow is closest to:
a.$(26,931)
b.$(11,542)
c.$(15,000)
d.$(35,000)
6) under the direct method of determining net cash provided by operating activities on
the statement of cash flows, a gain on the sale of plant assets would be:
a.added to the amount of operating expenses reported under the accrual basis
b.deducted from the amount of operating expenses reported under the accrual basis
c.deducted from the amount of sales reported under the accrual basis
d.totally ignored since the gain is not a part of sales, cost of goods sold, or operating
expenses
7) rawlings company prepared the following budget information for the coming year:
the budget assumes the sale of 20,000 units of a, 100,000 units of b, and 80,000 units of
c.
required:
a. what is the company’s break-even point given the sales mix above?
b. if the budgeted sales mix is maintained, what is the total contribution margin and net
operating income if 300,000 units are sold?
8) a quality cost incurred to detect individual units that do not conform to specifications
is an example of a(n):
a.prevention cost
b.appraisal cost
c.external failure cost
d.internal failure cost
9) derico corporation has two operating divisions-an atlantic division and a pacific
division. the company’s logistics department services both divisions. the variable costs
of the logistics department are budgeted at $42 per shipment. the logistics department’s
fixed costs are budgeted at $365,800 for the year. the fixed costs of the logistics
department are determined based on peak-period demand.
at the end of the year, actual logistics department variable costs totaled $388,800 and
fixed costs totaled $378,080. the atlantic division had a total of 4,700 shipments and the
pacific division had a total of 4,300 shipments for the year. for performance evaluation
purposes, how much actual logistics department cost should not be charged to the
operating divisions at the end of the year?
a.$23,080
b.$0
c.$12,280
d.$10,800
10) acer corporation, which applies manufacturing overhead on the basis of
machine-hours, has provided the following data for its most recent year of operations.
the estimates of the manufacturing overhead and of machine-hours were made at the
beginning of the year for the purpose of computing the company’s predetermined
overhead rate for the year.
the applied manufacturing overhead for the year is closest to:
a.$218,581
b.$221,023
c.$223,998
d.$221,556
11) net operating income computed using variable costing would exceed net operating
income computed using absorption costing if:
a.units sold exceed units produced
b.units sold are less than units produced
c.units sold equal units produced
d.the average fixed cost per unit is zero
12) nasson corporation manufactures and sells a single product. the company uses units
as the measure of activity in its budgets and performance reports. during august, the
company budgeted for 6,700 units, but its actual level of activity was 6,730 units. the
company has provided the following data concerning the formulas used in its budgeting
and its actual results for august:
the manufacturing overhead in the flexible budget for august would be closest to:
a.$55,358
b.$55,855
c.$55,076
d.$55,040