1) Tysor Framing’s cost formula for its supplies cost is $2,610 per month plus $17 per
frame. For the month of July, the company planned for activity of 710 frames, but the
actual level of activity was 712 frames. The actual supplies cost for the month was
$14,540. The spending variance for supplies cost in July would be closest to:
A.$140 U
B.$174 F
C.$140 F
D.$174 U
2) An increase in the Inventory account of a company from $10,000 at the beginning of
the year to $15,000 at the end of the year would be shown on the company’s statement
of cash flows prepared under the indirect method as:
A.an addition to net income of $5,000 in order to arrive at net cash provided by
operating activities.
B.a deduction from net income of $5,000 in order to arrive at net cash provided by
operating activities.
C.an addition to net income of $15,000 in order to arrive at net cash provided by
operating activities.
D.a deduction from net income of $10,000 in order to arrive at net cash provided by
operating activities.
3) Illescas Corporation manufactures and sells a single product. The company uses units
as the measure of activity in its budgets and performance reports. During December, the
company budgeted for 6,400 units, but its actual level of activity was 6,440 units. The
company has provided the following data concerning the formulas to be used in its
budgeting:
The net operating income in the planning budget for December would be closest to:
A.$19,433
B.$18,940
C.$19,676
D.$19,544
4) Krizum Industries makes heavy construction equipment. The standard for a particular
crane calls for 24 direct labor-hours at $16 per direct labor-hour. During a recent period
850 cranes were made. The labor rate variance was zero and the labor efficiency
variance was $8,800 unfavorable. How many actual direct labor-hours were worked?
A.19,850
B.20,400
C.20,950
D.35,200
5) Cowles Corporation, Inc. makes and sells a single product, Product R. Three yards of
Material K are needed to make one unit of Product R. Budgeted production of Product
R for the next five months is as follows:
The company wants to maintain monthly ending inventories of Material K equal to 30%
of the following month’s production needs. On July 31, this requirement was not met
because only 3,500 yards of Material K were on hand. The cost of Material K is $0.80
per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest
of the year.
The total cost of Material K to be purchased in August is:
A.$47,650
B.$38,120
C.$30,350
D.$24,280
6) Pettry Snow Removal’s cost formula for its vehicle operating cost is $2,170 per
month plus $408 per snow-day. For the month of December, the company planned for
activity of 16 snow-days, but the actual level of activity was 13 snow-days. The actual
vehicle operating cost for the month was $7,600. The vehicle operating cost in the
planning budget for December would be closest to:
A.$7,474
B.$9,354
C.$8,698
D.$7,600
7) During October, Beidleman Inc. transferred $52,000 from Work in Process to
Finished Goods and recorded a Cost of Goods Sold of $55,000. The journal entries to
record these transactions would include a:
A.credit to Cost of Goods Sold of $55,000
B.credit to Work in Process of $52,000
C.debit to Finished Goods of $55,000
D.credit to Finished Goods of $52,000
8) Which of the following companies would be most likely to use a process costing
system?
A.a shipbuilder
B.a furniture manufacturer
C.a law firm
D.a utility producing natural gas
9) Criblez Corporation has two divisions: Blue Division and Gold Division. The
following report is for the most recent operating period:
The Gold Division’s break-even sales is closest to:
A.$276,812
B.$301,391
C.$383,825
D.$201,449
10) Buonocore Clinic uses client-visits as its measure of activity. During August, the
clinic budgeted for 2,800 client-visits, but its actual level of activity was 2,770
client-visits. The clinic has provided the following data concerning the formulas used in
its budgeting and its actual results for August:
Data used in budgeting:
Actual results for August:
The medical supplies in the flexible budget for August would be closest to:
A.$18,697
B.$18,880
C.$18,899
D.$18,497
11) 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 purchases of raw materials for the second quarter should be:
A.50,000 pounds
B.55,800 pounds
C.50,800 pounds
D.55,000 pounds
12) The following information relates to last year’s operations at the Paper Division of
Germane Corporation:
What was the Paper Division’s net operating income last year?
A.$24,300
B.$29,160
C.$145,800
D.$162,000
13) Goldsmith Corporation has provided the following data:
The company’s net income in Year 2 was $24,400. The company’s book value per share
at the end of Year 2 is closest to:
A.$8.32 per share
B.$4.66 per share
C.$14.34 per share
D.$0.27 per share
14) Cosgrove, Inc., is a wholesaler that distributes a single product. The company’s
revenues and expenses for the last three months are given below:
Required:
a. Determine which expenses are mixed and, by use of the high-low method, separate
each mixed expense into variable and fixed elements. (Use unit sales as the activity
measure.) State the cost formula for each mixed expense.
b. Compute the company’s contribution margin for May.
15) The income tax expense in year 2 is:
A.$15,000
B.$6,000
C.$9,000
D.$36,000
16) Country Charm Restaurant is open 24 hours a day and always has a fire going in the
fireplace in the middle of its dining area. The cost of the firewood for this fire is fixed
with respect to the number of meals served at the restaurant.