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1) The Millard Corporation has two service departments and two operating
departments. The following data are available for a recent period:
Millard makes no distinction between fixed and variable costs. Costs of Service
Department A are allocated on the basis of number of employees while costs of Service
Department B are allocated on the basis of total labor hours.
Assume Millard allocates service department costs by the direct method. After all
allocations, the total amount of overhead costs in Operating Department 1 will be:
A.$155,000
B.$191,000
C.$157,100
D.$176,000
2) The Portland Division's operating data for the past two years is as follows:
The Portland Division's margin in Year 2 was 150% of the margin for Year 1.
The net operating income for Year 1 was:
A.$192,000
B.$128,000
C.$266,667
D.$208,000
3) All of the following would be classified as product costs except:
A) property taxes on production equipment.
B) insurance on factory machinery.
C) salaries of the marketing staff.
D) wages of machine operators.
4) Rardin Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in July.
The company applies variable overhead on the basis of direct labor-hours. The direct
materials purchases variance is computed when the materials are purchased.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the labor rate variance.
e. Compute the variable overhead efficiency variance.
f. Compute the variable overhead rate variance.
5) The following data pertain to operations at Quick Incorporated:
The wait time for this operation would be:
A.4 hours
B.2 hours
C.8 hours
D.cannot be determined from information provided
6) Which of the following levels of costs should not be allocated to products for
decision-making purposes?
A.Unit-level activities.
B.Batch-level activities.
C.Product-level activities.
D.Organization-sustaining activities.
7) How much more profit (loss) does the company make by processing the intermediate
product beet juice into refined sugar rather than selling it as is?
A.$(34)
B.$(11)
C.$(26)
D.$(57)
8) ( Baker Corporation is considering buying a new donut maker. This machine will
replace an old donut maker that still has a useful life of 4 years. The new machine will
cost $3,500 a year to operate, as opposed to the old machine, which costs $3,900 per
year to operate. Also, because of increased capacity, an additional 10,000 donuts a year
can be produced. The company makes a contribution margin of $0.15 per donut. The
old machine can be sold for $6,000 and the new machine costs $28,000. The
incremental annual net cash inflows provided by the new machine would be:
A.$1,500
B.$400
C.$1,900
D.$7,000
9) Which of the following is correct regarding the operating activities section of the
statement of cash flows?
A.The change in Accounts Payable will be added to net income; The change in Accrued
Liabilities will be subtracted from net income
B.The change in Accounts Payable will be subtracted from net income; The change in
Accrued Liabilities will be added to net income
C.The change in Accounts Payable will be subtracted from net income; The change in
Accrued Liabilities will be subtracted from net income
D.The change in Accounts Payable will be added to net income; The change in Accrued
Liabilities will be added to net income
An increase in a current liability is added to net income.
10) Aguilera Industries is a division of a major corporation. Data concerning the most
recent year appears below:
The division's turnover is closest to:
A.3.10
B.13.70
C.4.00
D.0.29
