Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
1) Braverman Corporation's net income last year was $75,000 and its interest expense
was $10,000. Total assets at the beginning of the year were $650,000 and total assets at
the end of the year were $610,000. The corporation's income tax rate was 30%. The
corporation's return on total assets for the year was closest to:
A.13.5%
B.12.4%
C.13.0%
D.11.9%
2) A company that makes organic fertilizer has supplied the following data:
The company's degree of operating leverage is closest to:
A.1.97
B.15.54
C.1.25
D.7.48
3) The company's inventory turnover for Year 2 is closest to:
A.3.89
B.1.04
C.3.97
D.4.05
4) If the applied manufacturing overhead was $169,300, the actual manufacturing
overhead cost for the year was:
A.$168,800
B.$153,400
C.$190,000
D.$185,200
5) Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce.
Gwinnett has the capacity to manufacture and sell 10,000 cases of sauce each year but
is currently only manufacturing and selling 9,000. The following costs relate to annual
operations at 9,000 cases:
Gwinnett normally sells its sauce for $30 per case. A local school district is interested in
purchasing Gwinnett's excess capacity of 1,000 cases of sauce but only if they can get
the sauce for $15 per case. This special order would not affect regular sales or total
fixed costs or variable costs per unit. If this special order is accepted, Gwinnett's profits
for the year will:
A.increase by $600
B.decrease by $1,000
C.decrease by $4,000
D.decrease by $6,600
6) The following materials standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
What is the materials price variance for the month?
A.$2,250 F
B.$7,540 U
C.$24,317 U
D.$7,660 U
7) Feltner Corporation manufactures and sells one product. The following information
pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable
selling and administrative costs. During its first year of operations, the company
produced 49,000 units and sold 42,000 units. The company's only product is sold for
$225 per unit.
Assume that the company uses a variable costing system that assigns $19 of direct labor
cost to each unit that is produced. The net operating income under this costing system
is:
A.$532,000
B.$399,000
C.$(210,000)
D.$882,000
8) When using data from a segmented income statement, the dollar sales for a segment
to break even is equal to:
A.Common fixed expenses / Unit CM
B.Common fixed expenses / Segment CM ratio
C.Traceable fixed expenses / Unit CM
D.Traceable fixed expenses / Segment CM ratio
9) The company's net profit margin percentage for Year 2 is closest to:
A.1.9%
B.2.7%
C.3.3%
D.38.1%
10) The management of Hannan Corporation would like to investigate the possibility of
basing its predetermined overhead rate on activity at capacity rather than on the
estimated amount of activity for the year. 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 12,000 machine-hours. In addition, capacity is 15,000 machine-hours and the
actual activity for the year is 12,100 machine-hours. All of the manufacturing overhead
is fixed and is $21,600 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
and the actual amount of manufacturing overhead for the year.
Required:
a. Determine the predetermined overhead rate if the predetermined overhead rate is
based on the amount of the allocation base at capacity.
b. Determine the underapplied or overapplied overhead for the year if the
predetermined overhead rate is based on the amount of the allocation base at capacity.
11) Zenon Kennel uses tenant-days as its measure of activity; an animal housed in the
kennel for one day is counted as one tenant-day. During July, the kennel budgeted for
3,300 tenant-days, but its actual level of activity was 3,260 tenant-days. The kennel has
provided the following data concerning the formulas used in its budgeting and its actual
results for July:
Data used in budgeting:
Actual results for July:
The food and supplies in the flexible budget for July would be closest to:
A.$27,732
B.$27,597
C.$28,060
D.$26,932
12) The present value of the annual cost savings of $37,000 is closest to:
A.$133,385
B.$235,070
C.$185,000
D.$20,979
13) Moffa Corporation manufactures and sells one product. The following information
pertains to the company's first year of operations:
The company does not have any variable manufacturing overhead costs or variable
selling and administrative costs. During its first year of operations, the company
produced 54,000 units and sold 47,000 units. The company's only product is sold for
$256 per unit.
The net operating income for the year under super-variable costing is:
A.$1,291,000
B.$1,193,000
C.$542,000
D.$1,739,000
14) Information about units processed and processing costs incurred during a recent
month in the Refining Department of a manufacturing company follow:
The beginning work in process inventory included $11,000 of conversion cost. During
the month, the Department incurred an additional $290,000 in conversion costs.
Assuming that the company uses the weighted-average cost method, what is the cost
per equivalent unit for conversion costs for the month in the Blending Department to
the nearest cent?
A.$2.55
B.$2.53
C.$2.50
D.$2.44
15) What would be the total variable inspection cost at an activity level of 6,700
machine-hours in a month? Assume that this level of activity is within the relevant
range.
A) $423,680
B) $443,540
C) $161,604
D) $578,048
16) Orem Corporation's current liabilities are $75,000, its long-term liabilities are
$225,000, and its working capital is $100,000. If the corporation's debt-to-equity ratio is
0.30, total long-term assets must equal:
A.$1,000,000
B.$1,300,000
C.$1,125,000
D.$1,225,000
17) Shocker Corporation's sales budget shows quarterly sales for the next year as
follows:
Unit sales
Corporation policy is to have a finished goods inventory at the end of each quarter
equal to 20% of the next quarter's sales. Budgeted production for the second quarter of
the next year would be:
A.7,200 units
B.8,000 units
C.8,800 units
D.8,400 units
18) Which of the following classifications best describes the behavior of shipping
expense?
A) Mixed
B) Variable
C) Fixed
D) none of the above
19) Sharron Inc., which produces a single product, has provided the following data for
its most recent month of operations:
There were no beginning or ending inventories. The variable costing unit product cost
was:
A.$111 per unit
B.$190 per unit
C.$117 per unit
D.$110 per unit
20) Finn Corporation's management believes that every 5% increase in the selling price
of one of the company's products results in a 6% decrease in the product's total unit
sales. The variable production cost of this product is $38.30 per unit and the variable
selling and administrative cost is $1.00 per unit.
The product's profit-maximizing price according to the formula in the text is closest to:
A.$43.62
B.$187.34
C.$41.55
D.$185.84
