Acct 201b Final Exam

28. Willow Valley's April sales forecast projects that 7,000 units will sell at a price of $10.50 per unit. The desired ending inventory is 30% higher than the beginning inventory, which was 1,000 units. Budgeted production in April would be a. 8,000 units b. 7,000 units c. 7,300 units d. 6,300 units

7,300 units

100. Motel Corporation is analyzing a capital expenditure that will involve a cash outlay of $208,240. Estimated cash flows are expected to be $40,000 annually for 7 years. The present value factors for an annuity of $1 for 7 years at interest of 6%, 8%, 10%, and 12% are 5.582, 5.206, 4.868, and 4.564, respectively. The internal rate of return for this investment is a. 10% b. 6% c. 12% d. 8%

8 %

98. An analysis of a proposal by the net present value method indicated that the present value of future cash inflows exceeded the amount to be invested. Which of the following statements best describes the results of this analysis? a. The proposal is desirable and the rate of return expected from the proposal exceeds the minimum rate used for the analysis. b. The proposal is desirable and the rate of return expected from the proposal is less than the minimum rate used for the analysis. c. The proposal is undesirable and the rate of return expected from the proposal is less than the minimum rate used for the analysis. d. The proposal is undesirable and the rate of return expected from the proposal exceeds the minimum rate used for the analysis.

The proposal is desirable and the rate of return expected from the proposal exceeds the minimum rate used for the analysis.

104. Which of the following results in long lead time? a. long setup times b. large batch sizes c. large inventories d. all of the above

all of the above

6. The amount of income under absorption costing will be less than the amount of income under variable costing when units manufactured: a. exceed units sold b. equal units sold c. are less than units sold d. are equal to or greater than units sold

are less than units sold

89. Which of the following are two methods of analyzing capital investment proposals that both ignore present value? a. internal rate of return and average rate of return b. net present value and average rate of return c. internal rate of return and net present value d. average rate of return and cash payback method

average rate of return and cash payback method

31. The budget that summarizes future plans for the acquisition of fixed assets is a. direct materials purchases budget b. production budget c. sales budget d. capital expenditures budget

capital expenditures budget

88. The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called a. absorption cost analysis b. variable cost analysis c. capital investment analysis d. cost-volume-profit analysis

capital investment analysis

106. Lean manufacturing philosophy reduces all of the following except a. inventory b. setup time c. lead time d. conversion costs

conversion costs

80. Starling Co. is considering disposing of a machine with a book value of $12,500 and estimated remaining life of five years. The old machine can be sold for $1,500. A new high-speed machine can be purchased at a cost of $25,000. It will have a useful life of five years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $26,000 to $23,500 if the new machine is purchased. The total net differential increase or decrease in cost for the new equipment for the entire five years is a. decrease of $11,000 b. decrease of $15,000 c. increase of $11,000 d. increase of $15,000

decrease of $11,000

Falcon Co. produces a single product. Its normal selling price is $30.00 per unit. The variable costs are $19.00 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20.00 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1.00 per unit would be eliminated. 81. If the order is accepted, what would be the impact on net income? a. decrease of $750 b. decrease of $4,500 c. increase of $3,000 d. increase of $1,500

decrease of $750

39. When preparing the cash budget, all the following should be considered except a. cash receipts from customers b. depreciation expense c. cash payments to suppliers d. cash payments for equipment

depreciation expense

42. The total manufacturing cost variance consists of a. direct materials price variance, direct labor cost variance, and fixed factory overhead volume variance b. direct materials cost variance, direct labor rate variance, and factory overhead cost variance c. direct materials cost variance, direct labor cost variance, and variable factory overhead controllable variance d. direct materials cost variance, direct labor cost variance, and factory overhead cost variance

direct materials cost variance, direct labor cost variance, and factory overhead cost variance

96. The production department is proposing the purchase of an automatic insertion machine. It has identified 3 machines and has asked the accountant to analyze them to determine the best average rate of return. Machine A Machine B Machine C Estimated average income $40,000 $50,000 $75,000 Average investment $300,000 $250,000 $500,000 a. Machine B b. Machine C c. Machine B or C d. Machine A

Machine B

7. The amount of income under absorption costing will equal the amount of income under variable costing when units manufactured: a. exceed units sold b. equal units sold c. are less than units sold d. are equal to or greater than units sold

equal units sold

8. The amount of income under absorption costing will be more than the amount of income under variable costing when units manufactured: a. exceed units sold b. equal units sold c. are less than units sold d. are equal to or greater than units sold

exceed units sold

16. Which of the following budgets allow for adjustments in activity levels? a. static budget b. continuous budget c. zero-based budget d. flexible budget

flexible budget

109. Examples of transforming a traditional manufacturing environment to a lean environment is to do all of the following except a. form partnerships with reliable suppliers. b. reorganize operational processes to organized product lines. c. train employees to perform various operations. d. increase raw materials to produce more, thereby increasing finished goods inventory.

increase raw materials to produce more, thereby increasing finished goods inventory.

107. Which of the following is considered non-value-added lead time? a. packing b. moving from process to process c. converting raw materials to finished product d. all of the above

moving from process to process

74. The amount of income that would result from an alternative use of cash is called: a. differential income b. sunk cost c. differential revenue d. opportunity cost

opportunity cost

25. Which of the following budgets provides the starting point for the preparation of the direct labor cost budget? a. direct materials purchases budget b. cash budget c. production budget d. sales budget

production budget

57. A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n) a. profit center b. investment center c. volume center d. cost center

profit center

21. The first budget customarily prepared as part of an entity's master budget is the a. production budget b. cash budget c. sales budget d. direct materials purchases

sales budget

41. A favorable cost variance occurs when a. actual costs are more than standard costs b. standard costs are more than actual costs c. standard costs are less than actual costs d. actual costs are the same as standard costs

standard costs are more than actual costs

112. Which of the following is not a prevention cost? a. preventive maintenance b. operator training c. design engineering d. testing finished products

testing finished products

3. Under absorption costing, which of the following costs would not be included in finished goods inventory? a. hourly wages of assembly worker b. straight-line depreciation on factory equipment c. overtime wages paid to factory workers d. the salaries for salespeople

the salaries for salespeople

95. Which of the following is true of the cash payback period? a. the longer the payback, the longer the estimated life of the asset b. the longer the payback, the sooner the cash spent on the investment is recovered c. the shorter the payback, the less likely the possibility of obsolescence d. all of the answers are correct

the shorter the payback, the less likely the possibility of obsolescence

83. When using the product cost concept of applying the cost-plus approach to product pricing, what is included in the markup? a. desired profit b. total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit c. total costs plus desired profit d. total selling and administrative expenses plus desired profit

total selling and administrative expenses plus desired profit

62. Income from operations of the Pierce Automobile Division is $2,225,000. If income from operations before service department charges is $3,250,000, a. operating expenses are $1,025,000 b. total service department charges are $1,025,000 c. non controllable charges are $1,025,000 d. direct manufacturing charges are $1,025,000

total service department charges are $1,025,000

53. The unfavorable volume variance may be due to all of the following factors except a. failure to maintain an even flow of work b. machine breakdowns c. unexpected increases in the cost of utilities d. failure to obtain enough sales orders

unexpected increases in the cost of utilities

Under absorption costing, which of the following costs would not be included in finished goods inventory? a. direct labor cost b. direct materials cost c. variable and fixed factory overhead cost d. variable and fixed selling and administrative expenses

variable and fixed selling and administrative expenses

18. Chelsa Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $23,000. At 8,000 units of production, a flexible budget would show a. variable costs of $64,000, and $28,000 of fixed costs b. variable costs of $64,000, and $23,000 of fixed costs c. variable costs of $72,000, and $23,000 of fixed costs d. variable and fixed costs totaling $107,000

variable costs of $72,000, and $23,000 of fixed costs

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is the: a. fixed manufacturing costs b. variable cost of goods sold c. fixed selling and administrative expenses d. variable selling and administrative expenses

variable selling and administrative expenses

17. The process of developing budget estimates by requiring all levels of management to estimate sales, production, and other operating data as though operations were being initiated for the first time is referred to as a. flexible budgeting b. continuous budgeting c. zero-based budgeting d. master budgeting

zero-based budgeting

4. Which of the following would be included in the cost of a product manufactured according to absorption costing? a. advertising expense b. sales salaries c. depreciation expense on factory building d. office supplies costs

depreciation expense on factory building

20. The production budgets are used to prepare which of the following budgets? a. operating expenses b. direct materials purchases, direct labor cost, and factory overhead cost c. sales in dollars d. sales in units

direct materials purchases, direct labor cost, and factory overhead cost

99. The management of Arkansas Corporation is considering the purchase of a new machine costing $490,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Income from Operations Net Cash Flow 1 $100,000 $180,000 2 40,000 120,000 3 40,000 100,000 4 10,000 90,000 5 10,000 120,000 The net present value for this investment is a. $36,400 b. $55,200 c. $(16,170) d. $(126,800)

$(16,170)

44. Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material at $4.50; and standard costs for 4,800 pounds of material at $5.10 per pound. What is the direct materials quantity variance? a. $1,020 favorable b. $1,020 unfavorable c. $900 favorable d. $900 unfavorable

$1,020 unfavorable

Production estimates for July are as follows: Estimated inventory (units), July 1 8,500 Desired inventory (units), July 31 10,500 Expected sales volume (units), July 76,000 For each unit produced, the direct materials requirements are as follows: Direct material A ($5 per lb.) 3 lbs. Direct material B ($18 per lb.) 1/2 lb. 27. The total direct materials purchases of materials A and B (assuming no beginning or ending material inventory) required for July production is a. $1,080,000 for A; $648,000 for B b. $1,080,000 for A; $1,296,000 for B c. $1,170,000 for A; $702,000 for B d. $1,125,000 for A; $675,000 for B

$1,170,000 for A; $702,000 for B

78. Keating Co. is considering disposing of equipment that cost $50,000 and has $40,000 of accumulated depreciation to date. Keating Co. can sell the equipment through a broker for $25,000 less 5% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $48,750. Keating will incur repair, insurance, and property tax expenses estimated at $8,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is a. $17,00 b. $7,000 c. $27,00 d. $14,50

$17,000

48. The following data relate to direct labor costs for the current period: Standard costs 7,500 hours at $11.70 Actual costs 6,000 hours at $12.00 What is the direct labor time variance? a. $18,000 favorable b. $18,000 unfavorable c. $17,550 unfavorable d. $17,550 favorable

$17,550 unfavorable

11. What is the amount of the income from operations that would be reported on the variable costing income statement? a. $18,900 b. $18,200 c. $18,000 d. $21,000

$18,200

12. What is the amount of the income from operations that would be reported on the absorption costing income statement? a. $21,000 b. $18,900 c. $18,200 d. $27,900

$18,900

75. Delaney Company is considering replacing equipment which originally cost $600,000 and which has $420,000 accumulated depreciation to date. A new machine will cost $790,000. What is the sunk cost in this situation? a. $370,000 b. $790,000 c. $180,000 d. $190,000

$180,000

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours) 3 hours per unit @ $0.80 per hour Variable overhead 3 hours per unit @ $2.00 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $8,000 49. The amount of the fixed factory overhead volume variance is a. $2,000 favorable b. $2,000 unfavorable c. $2,500 unfavorable d. $0

$2,000 unfavorable

Below is a table for the present value of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 101. Using the tables above, what would be the present value of $30,000 to be received 3 years from today, assuming an earnings rate of 6%? a. $25,200 b. $26,700 c. $23,760 d. $80,190

$25,200

A business operated at 100% of capacity during its first month, with the following results: Sales (90 units) $90,000 Production costs (100 units): Direct materials $40,000 Direct labor 20,000 Variable factory overhead 2,000 Fixed factory overhead 7,000 69,000 Operating expenses: Variable operating expenses $ 8,000 Fixed operating expenses 1,000 9,000 10. What is the amount of the contribution margin that would be reported on the variable costing income statement? a. $34,200 b. $20,200 c. $29,700 d. $26,200

$26,200

13. What is the amount of the gross profit that would be reported on the absorption costing income statement? a. $21,000 b. $18,900 c. $27,900 d. $18,000

$27,900

43. Myers Corporation has the following data related to direct materials costs for November: actual costs for 5,000 pounds of material, $4.50; and standard costs for 4,800 pounds of material at $5.10 per pound. What is the direct materials price variance? a. $3,000 favorable b. $3,000 unfavorable c. $2,880 favorable d. $2,880 unfavorable

$3,000 favorable

50. The amount of the variable factory overhead controllable variance is a. $2,000 unfavorable b. $3,000 favorable c. $0 d. $3,000 unfavorable

$3,000 unfavorable

76. Lara Technologies is considering a total cash outlay of $250,000 for the purchase of land, which it could lease out for $35,000 per year. If alternative investments are available that yield a 12% return, the opportunity cost of the purchase of the land is a. $35,000 b. $30,000 c. $250,000 d. $4,200

$30,000

9. A business operated at 100% of capacity during its first month and incurred the following costs: Production costs (20,000 units): Direct materials $180,000 Direct labor 240,000 Variable factory overhead 280,000 Fixed factory overhead 100,000 $800,000 Operating expenses: Variable operating expenses $130,000 Fixed operating expenses 50,000 180,000 If 1,500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet? a $62,500 b $73,500 c $60,000 d $52,500

$52,500

46. The materials price variance is a. $0 b. $59,400 unfavorable c. $59,400 favorable d. $6,000 unfavorable

$59,400 favorable

30. Gilbert's expects its September sales to be 20% higher than its August sales of $150,000. Manufacturing costs were $100,000 in August and are expected to be $120,000 in September. All sales are on credit and are collected as follows: 30% in the month of the sale and 70% in the following month. Payments of manufacturing costs are as follows: 25% in the month of production and 75% in the following month. The beginning cash balance on September 1 is $7,500. The ending balance on September 30 would be a. $61,500 b. $75,000 c. $72,300 d. $71,500

$61,500

26. If the expected sales volume for the current period is 7,000 units, the desired ending inventory is 400 units, and the beginning inventory is 400 units, the number of units set forth in the production budget, representing total production for the current period, is a. 6,700 b. 7,400 c. 7,100 d. 7,000

7,000

Schedule of Activity Costs Quality Control Activities Activity Cost Process audits $50,000 Training of machine operators 28,000 Processing returned products 19,000 Scrap processing (disposal) 25,000 Rework 8,000 Preventative maintenance 30,000 Product design 46,000 Warranty work 12,000 Finished goods inspection 23,000 110. From the above schedule of activity costs, determine the total activity cost. a. $62,000 b. $179,000 c. $94,000 d. $241,000 111. From the above schedule of activity costs, determine the value-added costs. a. $177,000 b. $191,000 c. $156,000 d. $104,000

110. $241,000 111. $104,000

94. The expected average rate of return for a proposed investment of $6,000,000 in a fixed asset, using straight-line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $12,000,000 over the 20 years is a. 20% b. 10% c. 40% d. 5%

20%

23. Production and sales estimates for May for the Cardinal Co. are as follows: Estimated inventory (units), May 1 19,500 Desired inventory (units), May 31 19,300 Expected sales volume (units): Area W 6,000 Area X 7,000 Area Y 8,000 Unit sales price $20 The number of units expected to be sold in May is a. 21,000 b. 3,700 c. 22,800 d. 18,300

21,000

Production estimates for August are as follows: Estimated inventory (units), August 1 12,000 Desired inventory (units), August 31 9,000 Expected sales volume (units), August 75,000 For each unit produced, the direct materials requirements are as follows: Material A ($5 per lb.) 3 lbs. Material B ($18 per lb.) 1/2 lb. 24. The number of pounds of Materials A and B required for August production is a. 216,000 lbs. of A; 72,000 lbs. of B b. 216,000 lbs. of A; 36,000 lbs. of B c. 225,000 lbs. of A; 37,500 lbs. of B d. 234,000 lbs. of A; 39,000 lbs. of B

216,000 lbs. of A; 36,000 lbs. of B

91. The expected average rate of return for a proposed investment of $800,000 in a fixed asset with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $360,000 for the 4 years, is a. 45% b. 22.5% c. 11.3% d. 5.5%

22.5%

A company is preparing its cash budget. Its cash balance on January 1 is $290,000 and it has a minimum cash requirement of $340,000. The following data has been provided: January February March Cash receipts $1,061,200 $1,182,400 $1,091,700 Cash payments 984,500 1,210,000 1,075,000 36. What is the amount of the deficiency or excess cash (after considering the minimum cash balance required) for January? a. excess of $26,700 b. deficiency of $136,700 c. excess of $356,700 d. excess of $60,000 37. What is the amount of cash excess or deficiency (after considering the minimum cash balance required) for February? a. deficiency of $109,100 b. excess of $10,900 c. deficiency of $900 d. excess of $109,100 38. What is the amount of cash excess or deficiency (after considering the minimum cash balance required) for March? a. excess of $214,200 b. excess of $15,800 c. deficiency of $60,000 d. excess of $25,300

36. excess of $26,700 37. deficiency of $900 38. excess of $15,800

92. An anticipated purchase of equipment for $490,000 with a useful life of 8 years and no residual value is expected to yield the following annual net incomes and net cash flows: Year Net Income Net Cash Flow 1 $60,000 $110,000 2 50,000 100,000 3 50,000 100,000 4 40,000 90,000 5 40,000 90,000 6 40,000 90,000 7 40,000 90,000 8 40,000 90,000 What is the cash payback period? a. 5 years b. 4 years c. 6 years d. 3 years

4 years

93. Hayden Company is considering the acquisition of a machine that costs $675,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual net cash flow of $150,000, and annual operating income of $87,500. What is the estimated cash payback period for the machine? a. 3.5 years b. 4 years c. 4.5 years d. 5 years

4.5 years

ABC Corporation has three service departments with the following costs and activity base: Service Department Cost Activity Base for Allocation Graphics Production $200,000 number of copies Accounting 500,000 number of invoices processed Personnel Department 400,000 number of employees ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows: Micro Macro Super Direct revenues $700,000 $850,000 $650,000 Direct operating expenses 50,000 70,000 100,000 Number of copies made 20,000 30,000 50,000 Number of invoices processed 700 800 500 Number of employees 130 145 125 64. What is the service department charge rate for Graphics Production? a. $2.00 b. $10.00 c. $6.66 d. $0.50 65. What will the income of the Micro Division be after all service department allocations? a. $305,000 b. $650,000 c. $345,000 d. $610,000

64. $2.00 65. $345,000

Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%. 66. The profit margin for Mason is a. 7.1% b. 20% c. 15.2% d. 14.1% 67. The investment turnover for Mason is a. 1.08 b. 0.93 c. 6.57 d. 7.07 68. The residual income for Mason is a. $0 b. $84,150 c. $(6,000) d. $1,500

66. 14.1% 67. 1.08 68. $1,500

1. What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost? a. Standard costing b. Variable costing c. Absorption costing d. Marginal costing

Absorption costing

105. How are the objectives of lean manufacturing achieved? a. Product-oriented production layout b. Employee involvement c. Supplier partnering d. All of the above

All of the above

108. Which of the following drives work-in-process inventory levels higher? a. Machine breakdowns b. Production rate losses c. Rework processes d. All of the above

All of the above

If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges, it follows that a. Division A's manager is given the bonus b. Division B's manager is given the bonus c. Division C's manager is given the bonus d. Divisions B and C's managers divide the bonus

Division A's manager is given the bonus

84. Which equation better describes target costing? a. Selling price - Desired profit = Target costs b. Selling price + Profit = Target costs c. Target variable costs + Contribution margin = Selling price d. Selling price = Profit - Target variable costs

Selling price - Desired profit = Target costs

82. Which of the following reasons would cause a company to reject an offer to accept business at a special price? a. The additional sale will not conflict with regular sales. b. The additional sales will increase differential income. c. The additional sales will not increase fixed expenses. d. The additional sales will increase fixed expenses.

The additional sales will increase fixed expenses.

70. The balanced scorecard measures a. only financial information b. only nonfinancial information c. both financial and nonfinancial information d. external and internal information

both financial and nonfinancial information

59. Which of the following is a measure of a cost center manager's performance? a. budget performance report b. rate of return and residual income measures c. divisional income statements d. balance sheet

budget performance report

19. If budgeted beginning inventory is $8,000, budgeted ending inventory is $9,400, and budgeted cost of goods sold is $10,260, budgeted production should be a. $1,400 b. $9,600 c. $11,660 d. $11,550

$11,660

Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $320,000, and $410,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale. 34. The cash collections expected in October are a. $320,000 b. $248,000 c. $304,250 d. $382,500 35. The cash collections in November are a. $317,750 b. $389,750 c. $490,000 d. $410,000

34. $304,250 35. $389,750

79. Sparrow Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $8.00 a unit. The unit cost for Sparrow Co. to make the part is $9.00, which includes $0.60 of fixed costs. If 4,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it? a. $12,000 cost decrease b. $4,000 cost increase c. $20,000 cost decrease d. $1,600 cost increase

$1,600 cost increase

The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% of normal capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: Standard: 25,000 hours at $10 $250,000 Actual: Variable factory overhead $202,500 Fixed factory overhead 60,000 52. What is the amount of the fixed factory overhead volume variance? a. $12,500 favorable b. $10,000 unfavorable c. $12,500 unfavorable d. $10,000 favorable

$10,000 unfavorable

97. Using the following partial table of present value of $1 at compound interest, the present value of $15,000 to be received 3 years hence with earnings at the rate of 6% a year is Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 a $12,600 b. $11,880 c. $13,350 d. $11,265

$12,600

73. Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. The unit cost for the business to make the part is $20, including fixed costs, and $11, not including fixed costs. If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? a. $150,000 cost increase b. $120,000 cost decrease c. $150,000 cost decrease d. $120,000 cost increase

$120,000 cost decrease

Rylan Corporation received an offer from an exporter for 25,000 units of product at $16 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $22 Unit manufacturing costs: Variable 11 Fixed 6 77. What is the amount of the income or loss from acceptance of the offer? a. $125,000 loss b. $25,000 income c. $125,000 income d. $25,000 loss

$125,000 income

72. The condensed income statement for a Fletcher Inc. for the past year is as follows: Product F G H Total Sales $300,000 $210,000 $340,000 $850,000 Costs: Variable costs $180,000 $180,000 $220,000 $590,000 Fixed costs 50,000 50,000 40,000 140,000 Total costs $230,000 $230,000 $260,000 $730,000 Income (loss) $ 70,000 $(20,000) $ 80,000 $120,000 Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G? a. $20,000 increase b. $30,000 increase c. $20,000 decrease d. $30,000 decrease

$30,000 decrease

Widgeon Co. manufactures three products: Bales, Tales, and Wales. The selling prices are $55, $78, and $32, respectively. The variable costs for each product are $20, $50, and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process; Tales, 7 hours; and Wales 1 hour. 85. What is the contribution margin per machine hour for Tales? a. $4 b. $7 c. $28 d. $35

$4

51. The following data relate to direct labor costs for the current period: Standard costs 6,000 hours at $12.00 Actual costs 7,500 hours at $11.40 What is the direct labor rate variance? a. $18,000 unfavorable b. $4,500 favorable c. $17,100 unfavorable d. $3,600 favorable

$4,500 favorable

29. Consider Derek's budget information: materials to be used totals $64,750; direct labor totals $198,400; factory overhead totals $394,800; work in process inventory January 1, $189,100; and work in progress inventory on December 31, $197,600. What is the budgeted cost of goods manufactured for the year? a. $649,450 b. $657,950 c. $197,600 d. $1,044,650

$649,450

22. Production and sales estimates for March for the Robin Co. are as follows: Estimated inventory (units), March 1 18,000 Desired inventory (units), March 31 21,600 Expected sales volume (units): Area M 7,000 Area L 8,000 Area O 9,000 Unit sales price $15 The number of units expected to be manufactured in March is a. 24,000 b. 27,000 c. 27,600 d. 21,600

27,600

69. Marshall Corporation had $220,000 in invested assets, sales of $242,000, income from operations of $66,000, and a desired minimum rate of return of 3%. The rate of return on investment for Marshall is a. 9.1% b. 30% c. 3.0% d. 27.3%

30%

58. For higher levels of management, responsibility accounting reports a. are more detailed than for lower levels of management b. are more summarized than for lower levels of management c. contain about the same level of detail as reports for lower levels of management d. are rarely provided or reviewed

are more summarized than for lower levels of management

90 The method of analyzing capital investment proposals that divides the estimated average annual income by the average investment is a. cash payback method b. net present value method c. internal rate of return method d. average rate of return method

average rate of return method

56. A manager is responsible for costs only in a(n) a. profit center b. investment center c. volume center d. cost center

cost center

60. Which of the following expenses incurred by the sporting goods department of a department store is a direct expense? a. depreciation expense—office equipment b. insurance on inventory of sporting goods c. uncollectible accounts expense d. office salaries

insurance on inventory of sporting goods

15. Budgeting supports the planning process by encouraging all of the following activities except a. requiring all organizational units to establish their goals for the upcoming period b. increasing the motivation of managers and employees by providing agreed-upon expectations c. directing and coordinating operations during the period d. improving overall decision making by considering all viewpoints, options, and cost reduction possibilities

directing and coordinating operations during the period

55. Which is the best example of a decentralized operation? a. one owner who prepares plans and makes decisions for the entire company b. each unit is responsible for their own operations and decision making c. in a major company, operating decisions are made by top management d. none of these, all are examples of a centralized operation

each unit is responsible for their own operations and decision making

45. If the actual quantity of direct materials used in producing a commodity differs from the standard quantity, the variance is a a. controllable variance b. price variance c. quantity variance d. rate variance

quantity variance

47. If the actual direct labor hours spent producing a commodity differs from the standard hours, the variance is a a. time variance b. price variance c. quantity variance d. rate variance

quantity variance

61. Which of the following expenses incurred by a department store is an indirect expense? a. insurance on merchandise inventory b. sales salaries c. depreciation on store equipment d. salary of vice president of finance

salary of vice president of finance