1) grundmann inc. reports that at an activity level of 6,500 machine-hours in a month,
its total variable inspection cost is $487,110 and its total fixed inspection cost is
$326,040.
what would be the average fixed inspection cost per unit at an activity level of 6,600
units in a month? assume that this level of activity is within the relevant range.
a.$125.10
b.$74.89
c.$50.16
d.$49.40
2) letze corporation would like to determine the relative profitability of the company’s
products for purposes of making volume trade-off decisions. the company has provided
the following data for product i69y:
what is the profitability index for product i69y?
a.$109,120
b.0.20
c.$22.00 per minute
d.$4.40 per minute
3) notes to the instructor:
* the problem requirement does not indicate whether the indirect or direct method must
be used to determine the net cash provided by operating activities. you can, if you
choose, specify that either (or even both) methods be used. the solution contains
solutions for both methods.
* due to the length of the problem, you may want to eliminate one or more of the
requirements.
davis company’s comparative balance sheet and income statement for last year appear
below:
the company declared and paid $26,000 in cash dividends during the year.
required:
a. construct the operating activities section of the company’s statement of cash flows for
the year.
b. construct the investing activities section of the company’s statement of cash flows for
the year.
c. construct the financing activities section of the company’s statement of cash flows for
the year.
4) wertman corporation produces and sells a single product with the following
characteristics:
the company is currently selling 3,000 units per month. fixed expenses are $215,000 per
month. consider each of the following questions independently.
this question is to be considered independently of all other questions relating to
wertman corporation. refer to the original data when answering this question.
management is considering using a new component that would increase the unit
variable cost by $5. since the new component would increase the features of the
company’s product, the marketing manager predicts that monthly sales would increase
by 200 units. what should be the overall effect on the company’s monthly net operating
income of this change?
a.increase of $15,800
b.decrease of $15,800
c.increase of $800
d.decrease of $800
5) guasson corporation uses the weighted-average method in its process costing system.
this month, the beginning inventory in the first processing department consisted of 500
units. the costs and percentage completion of these units in beginning inventory were:
a total of 6,400 units were started and 5,800 units were transferred to the second
processing department during the month. the following costs were incurred in the first
processing department during the month:
the ending inventory was 85% complete with respect to materials and 50% complete
with respect to conversion costs.
note: your answers may differ from those offered below due to rounding error. in all
cases, select the answer that is the closest to the answer you computed. to reduce
rounding error, carry out all computations to at least three decimal places.
how many units are in ending work in process inventory in the first processing
department at the end of the month?
a.900
b.1,100
c.600
d.5,900
6) baroche inc. uses the weighted-average method in its process costing system. the
following data concern the operations of the company’s first processing department for
a recent month.
required:
using the weighted-average method:
a. determine the equivalent units of production for materials and conversion costs.
b. determine the cost per equivalent unit for materials and conversion costs.
c. determine the cost of units transferred out of the department during the month.
d. determine the cost of ending work in process inventory in the department.
7) in august, bliek corporation sold 8,300 units of its only product. its total sales were
$664,000, its total variable expenses were $415,000, and its total fixed expenses were
$204,000.
required:
a. construct the company’s contribution format income statement for august in good
form.
b. redo the company’s contribution format income statement assuming that the company
sells 8,600 units.
8) eschbach company is a wholesale distributor that uses activity-based costing for all
of its overhead costs. the company has provided the following data concerning its
annual overhead costs and its activity based costing system:
the “other” activity cost pool consists of the costs of idle capacity and
organization-sustaining costs.
the amount of activity for the year is as follows:
what would be the total overhead cost per customer according to the activity based
costing system? in other words, what would be the overall activity rate for the customer
support activity cost pool? (round to the nearest whole dollar.)
a.$4,760
b.$5,600
c.$4,340
d.$3,920
9) smithson clinic uses client-visits as its measure of activity. during may, the clinic
budgeted for 3,300 client-visits, but its actual level of activity was 3,270 client-visits.
the clinic has provided the following data concerning the formulas used in its budgeting
and its actual results for may:
the occupancy expenses in the flexible budget for may would be closest to:
a.$14,334
b.$13,840
c.$13,786
d.$14,599
10) selected financial data (in thousands of dollars) for barnstable company appear
below:
for year 2, the gross margin as a percentage of sales was:
a.5%
b.60%
c.10%
d.40%