1) hostetter corporation would like to use target costing for a new product it is
considering introducing. at a selling price of $30 per unit, management projects sales of
30,000 units. the new product would require an investment of $200,000. the desired
return on investment is 13%. the target cost per unit is closest to:
a.$32.92
b.$30.00
c.$33.90
d.$13
2) dagg corporation reported the following data for the month of october:
the total manufacturing cost for october was:
a.$84,000
b.$114,000
c.$176,000
d.$165,000
3) spraque air uses two measures of activity, flights and passengers, in the cost formulas
in its budgets and performance reports. the cost formula for plane operating costs is
$40,520 per month plus $2,733 per flight plus $11 per passenger. the company expected
its activity in june to be 71 flights and 207 passengers, but the actual activity was 70
flights and 205 passengers. the actual cost for plane operating costs in june was
$239,580.
the plane operating costs in the planning budget for june would be closest to:
a.$239,580
b.$236,840
c.$234,085
d.$243,003
4) osier corporation, which produces cellular transmission towers, has provided the
following data:
the variable overhead efficiency variance for indirect labor is:
a.$10,107 f
b.$1,288 f
c.$10,107 u
d.$1,288 u
5) 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 needed (i.e., unit sales plus desired ending inventory) in march
is:
a.6,120 units
b.6,080 units
c.5,400 units
d.5,940 units
6) anspach corporation has two divisions: the governmental products division and the
consumer products division. the governmental products division’s divisional segment
margin is $11,800 and the consumer products division’s divisional segment margin is
$155,500. the total amount of common fixed expenses not traceable to the individual
divisions is $142,200. what is the company’s net operating income?
a.($167,300)
b.$25,100
c.$309,500
d.$167,300
7) lantagne corporation keeps careful track of the time required to fill orders. data
concerning a particular order appear below:
the manufacturing cycle efficiency (mce) was closest to:
a.0.24
b.0.16
c.0.92
d.0.08
8) the cost of goods sold in a retail store totaled $325,000. fixed selling and
administrative expenses totaled $115,000 and variable selling and administrative
expenses were $210,000. if the store’s contribution margin totaled $590,000, then sales
must have been:
a.$1,125,000
b.$1,030,000
c.$915,000
d.$650,000
9) murphree clinic uses client-visits as its measure of activity. during april, the clinic
budgeted for 3,300 client-visits, but its actual level of activity was 3,350 client-visits.
the clinic has provided the following data concerning the formulas used in its budgeting
and its actual results for april:
the net operating income in the flexible budget for april would be closest to:
a.$20,115
b.$19,519
c.$14,425
d.$13,550
10) the following standards have been established for a raw material used to make
product n04:
the following data pertain to a recent month’s operations:
required:
a. what is the materials price variance for the month?
b. what is the materials quantity variance for the month?
11) the book value per share at the end of year 2 is closest to:
a.$0.30
b.$4.60
c.$5.10
d.$8.20
12) (ignore income taxes in this problem.) knipper corporation has entered into a 9 year
lease for a piece of equipment. the annual payment under the lease will be $2,300, with
payments being made at the beginning of each year. if the discount rate is 11%, the
present value of the lease payments is closest to:
a.$18,649
b.$14,136
c.$20,700
d.$8,092
13) walsh company produces a single product. last year, the company manufactured
25,000 units and sold 22,000 units. production costs were as follows:
sales totaled $440,000, variable selling and administrative expenses were $110,000, and
fixed selling and administrative expenses were $45,000. there was no beginning
inventory. assume that direct labor is a variable cost.
under variable costing, the total amount of fixed manufacturing cost in the ending
inventory would be:
a.$0
b.$9,000
c.$14,400
d.$27,000
14) morsell corporation has provided the following data from its activity-based costing
accounting system:
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs that are not assigned to products.
how much supervisory wages and factory supplies cost would not be assigned to
products using the activity-based costing system?
a.$0
b.$280,000
c.$240,000
d.$76,000
15) jarmon 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.
what is the net operating income for the month under absorption costing?
a.$4,500
b.$12,800
c.$25,500
d.$10,900
16) the following standards have been established for a raw material used in the
production of product n70:
the following data pertain to a recent month’s operations:
required:
a. what is the materials price variance for the month?
b. what is the materials quantity variance for the month?
c. prepare journal entries to record the purchase and use of the raw material during the
month. (all raw materials are purchased on account.)
17) hauber corporation would like to use target costing for a new product it is
considering introducing. at a selling price of $26 per unit, management projects sales of
60,000 units. the new product would require an investment of $300,000. the desired
return on investment is 20%.
the target cost per unit is closest to:
a.$26.00
b.$31.20
c.$30.00
d.$25.00
18) division n has asked division m of the same company to supply it with 10,000 units
of part p782 this year to use in one of its products. division n has received a bid from an
outside supplier for the parts at a price of $25.00 per unit. division m has the capacity to
produce 50,000 units of part p782 per year. division m expects to sell 46,000 units of
part p782 to outside customers this year at a price of $26.00 per unit. to fill the order
from division n, division m would have to cut back its sales to outside customers.
division m produces part p782 at a variable cost of $17.00 per unit. the cost of packing
and shipping the parts for outside customers is $1.00 per unit. these packing and
shipping costs would not have to be incurred on sales of the parts to division n.
required:
a. what is the range of transfer prices within which both the divisions’ profits would
increase as a result of agreeing to the transfer of 10,000 parts this year from division n
to division m?
b. is it in the best interests of the overall company for this transfer to take place?
explain.
19) junsin corporation’s budget for next year appears below. the budget assumes the
company will sell 30,000 units.
the company’s margin of safety as a percentage of sales (rounded to the nearest whole
percent) is:
a.33%
b.50%
c.12%
d.67%
