ACCT 202 Test one

Laflame Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Total machine-hours 70,000Total fixed manufacturing overhead cost$357,000Variable manufacturing overhead per machine-hour$3.90 The estimated total manufacturing overhead is closest to:

$630,000

Lazano, Inc., manufactures and sells two products: Product W4 and Product Z2. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected ProductionDirect Labor-Hours Per UnitTotal Direct Labor-HoursProduct W45006.03,000Product Z24004.01,600Total direct labor-hours 4,600 The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: EstimatedExpected ActivityActivity Cost PoolsActivity MeasuresOverhead CostProduct W4Product Z2TotalLabor-relatedDLHs$89,1483,0001,6004,600Product testingtests 45,6804006001,000Order sizeMHs 410,1753,8003,7007,500 $545,003 The overhead applied to each unit of Product Z2 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

$651.92 per unit Correct

In a statement of cash flows, which of the following would be classified as an investing activity?

The sale of equipment.

In a statement of cash flows, issuing bonds payable affects the:

financing activities section.

When the level of activity decreases within the relevant range, the fixed cost per unit will:

increase.

Materials used in a factory that are not an integral part of the final product, such as cleaning supplies, should be classified as:

manufacturing overhead.

Illies Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending BalanceBeginning BalanceAssets: Current assets: Cash and cash equivalents$40,000 $33,000 Accounts receivable 19,000 21,000 Inventory 67,000 69,000 Total current assets 126,000 123,000 Property, plant, and equipment 358,000 339,000 Less accumulated depreciation 156,000 132,000 Net property, plant, and equipment 202,000 207,000 Total assets$328,000 $330,000 Liabilities and stockholders' equity: Current liabilities: Accounts payable$18,000 $19,000 Accrued liabilities 54,000 59,000 Income taxes payable 48,000 42,000 Total current liabilities 120,000 120,000 Bonds payable 82,000 86,000 Total liabilities 202,000 206,000 Stockholders' equity: Common stock 23,000 22,000 Retained earnings 103,000 102,000 Total stockholders' equity 126,000 124,000 Total liabilities and stockholders' equity$328,000 $330,000 The company did not dispose of any property, plant, and equipment during the year. Its net income for the year was $5,000 and its cash dividends were $4,000. The company did not issue any bonds payable or purchase any of its own common stock during the year. Its net cash provided by (used in) operating activities and net cash provided by (used in) financing activities are:

net cash provided by operating activities, $33,000; net cash used in financing activities, $(7,000)

In a statement of cash flows, a change in an income taxes payable account would be recorded in the:

operating activities section.

A cost incurred in the past that is not relevant to any current decision is classified as a(n):

sunk cost.

Malcolm Company uses a weighted-average process costing system. All materials at Malcolm are added at the beginning of the production process. The equivalent units for materials at Malcolm would be the sum of:

units in beginning work in process and the units started.

For an automobile manufacturer, the cost of a driver's side air bag purchased from a supplier and installed in every automobile would best be described as a:

variable cost.

Within the relevant range, variable costs can be expected to:

vary in total in direct proportion to changes in the activity level.

Gnas Corporation's total current assets are $210,000, its noncurrent assets are $590,000, its total current liabilities are $160,000, its long-term liabilities are $490,000, and its stockholders' equity is $150,000. The current ratio is closest to:

1.31

In the Schedule of Cost of Goods Manufactured and Cost of Goods Sold, the cost of goods manufactured is computed according to which of the following equations?

Cost of goods manufactured = Total manufacturing costs + Beginning work in process inventory - Ending work in process inventory

The most recent balance sheet and income statement of Penaloza Corporation appear below: Comparative Balance Sheet Ending BalanceBeginning BalanceAssets: Cash and cash equivalents$47 $39 Accounts receivable 49 55 Inventory 36 39 Property, plant, and equipment 474 370 Less accumulated depreciation 250 218 Total assets$356 $285 Liabilities and stockholders' equity: Accounts payable$36 $35 Accrued liabilities 27 25 Income taxes payable 36 44 Bonds payable 88 80 Common stock 45 40 Retained earnings 124 61 Total liabilities and equity$356 $285 Income StatementSales$773Cost of goods sold 468Gross margin 305Selling and administrative expense 189Net operating income 116Income taxes 35Net income$81 The company paid a cash dividend of $18. It did not dispose of any property, plant, and equipment. The company did not retire any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities for the year was:

$(104)

Megan Corporation's net income last year was $98,000. Changes in the company's balance sheet accounts for the year appear below: Increases(Decreases)Asset and Contra-Asset Accounts: Cash and cash equivalents$(3,000)Accounts receivable$(14,000)Inventory$3,000 Prepaid expenses$(7,000)Long-term investments$80,000 Property, plant, and equipment$55,000 Accumulated depreciation$58,000 Liability and Equity Accounts: Accounts payable$0 Accrued liabilities$15,000 Income taxes payable$(11,000)Bonds payable$(30,000)Common stock$20,000 Retained earnings$62,000 The company paid a cash dividend of $36,000 and it did not dispose of any long-term investments or property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities last year was:

$(135,000)

Buckley Corporation's most recent comparative balance sheet appears below: Comparative Balance Sheet Ending BalanceBeginning BalanceAssets: Cash and cash equivalents$19 $20 Accounts receivable 26 27 Inventory 56 51 Property, plant, and equipment 686 550 Less accumulated depreciation 430 363 Total assets$357 $285 Liabilities and stockholders' equity: Accounts payable$30 $34 Bonds payable 43 40 Common stock 54 50 Retained earnings 230 161 Total liabilities and stockholders' equity$357 $285 The company's net income for the year was $91 and it paid a cash dividend of $22. It did not dispose of any property, plant, and equipment during the year. The company did not retire any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) investing activities for the year was:

$(136)

Krech Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending BalanceBeginning BalanceAssets: Current assets: Cash and cash equivalents$31,000 $28,000 Accounts receivable 18,000 20,000 Inventory 58,000 56,000 Prepaid expenses 12,000 10,000 Total current assets 119,000 114,000 Property, plant, and equipment 374,000 354,000 Less accumulated depreciation 190,000 165,000 Net property, plant, and equipment 184,000 189,000 Total assets$303,000 $303,000 Liabilities and stockholders' equity: Current liabilities: Accounts payable$13,000 $9,000 Accrued liabilities 52,000 53,000 Income taxes payable 67,000 69,000 Total current liabilities 132,000 131,000 Bonds payable 76,000 73,000 Total liabilities 208,000 204,000 Stockholders' equity: Common stock 28,000 26,000 Retained earnings 67,000 73,000 Total stockholders' equity 95,000 99,000 Total liabilities and stockholders' equity$303,000 $303,000 The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities. The company's net cash provided by (used in) investing activities is:

$(20,000)

Majorn Auto Parts Store had net income of $81,000 for the year just ended. Majorn collected the following additional information to prepare its statement of cash flows for the year: Increase in accounts receivable$102,000Decrease in inventory$18,000Decrease in accounts payable$35,000Increase in retained earnings$29,000Cash received from sale of building$215,000Gain on sale of building$47,000Depreciation expense$32,000 Majorn uses the indirect method to prepare its statement of cash flows. What is Majorn's net cash provided by (used in) operating activities?

$(53,000)

Delfavero Corporation has provided the following data: Year 2Year 1Common stock, $2 par value$140,000 $140,000 Total stockholders' equity$953,000 $930,000 Net operating income$55,462 Net income before taxes$36,462 Net income$23,700 The company's earnings per share for Year 2 is closest to:

$0.34 per share

Furis Corporation's cash and cash equivalents consist of cash and marketable securities. Last year the company's cash account decreased by $12,000 and its marketable securities account increased by $19,000. Net cash provided by (used in) operating activities was $18,000. Net cash provided by (used in) financing activities was $(12,000). Based on this information, the net cash provided by (used in) investing activities on the statement of cash flows was:

$1,000

Dukes Corporation used a predetermined overhead rate this year of $2 per direct labor-hour, based on an estimate of 20,000 direct labor-hours to be worked during the year. Actual costs and activity during the year were: Actual manufacturing overhead cost incurred$38,000Actual direct labor-hours worked 18,500 The overapplied or underapplied manufacturing for the year was:

$1,000 underapplied

Hesson, Inc., manufactures and sells two products: Product F3 and Product F0. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected ProductionDirect Labor-Hours Per UnitTotal Direct Labor-HoursProduct F33006.01,800Product F02005.01,000Total direct labor-hours 2,800 The direct labor rate is $16.30 per DLH. The direct materials cost per unit for each product is given below: Direct Materials Cost per UnitProduct F3$261.40 Product F0$187.50 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: EstimatedExpected ActivityActivity Cost PoolsActivity MeasuresOverhead CostProduct F3Product F0TotalLabor-relatedDLHs$110,9641,8001,0002,800Machine setupssetups 33,005300200500Order sizeMHs 486,7203,1002,9006,000 $630,689 The unit product cost of Product F3 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

$1,501.23 per unit

Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,800 hours and the total estimated manufacturing overhead was $497,040. At the end of the year, actual direct labor-hours for the year were 21,500 hours and the actual manufacturing overhead for the year was $492,040. Overhead at the end of the year was: (Round your intermediate calculations to 2 decimal places.)

$1,840 underapplied

Bolka Corporation, a merchandising company, reported the following results for October: Sales$4,096,400Cost of goods sold (all variable)$2,194,500Total variable selling expense$238,700Total fixed selling expense$144,700Total variable administrative expense$238,700Total fixed administrative expense$282,900 The gross margin for October is:

$1,901,900

Wessner Corporation has provided the following information: Cost per UnitCost per PeriodDirect materials$6.20 Direct labor$2.80 Variable manufacturing overhead$1.45 Fixed manufacturing overhead $12,000 Sales commissions$1.00 Variable administrative expense$0.55 Fixed selling and administrative expense $4,000 The incremental manufacturing cost that the company will incur if it increases production from 4,000 to 4,001 units is closest to:

$10.45

Frankin Corporation's net cash provided by operating activities was $192; its capital expenditures were $154; and its cash dividends were $27. The company's free cash flow was:

$11

Varela Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows: Average Cost per UnitDirect materials$5.95Direct labor$3.30Variable manufacturing overhead$1.60Fixed manufacturing overhead$3.00Fixed selling expense$0.50Fixed administrative expense$0.40Sales commissions$1.50Variable administrative expense$0.50 For financial reporting purposes, the total amount of period costs incurred to sell 4,000 units is closest to:

$11,600

Recher Corporation's common stock has a par value of $3 per share and has been stable at a total value of $270,000 on the company's balance sheet for several years. The total stockholders' equity at the end of this year was $1,023,000 and at the beginning of the year was $1,010,000. Net income for the year was $17,500. Dividends on common stock during the year totaled $4,500. The market price of common stock at the end of the year was $3.76 per share. The company's book value per share at the end of the year is closest to:

$11.37 per share

Fatzinger Corporation has two production departments, Milling and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: MillingAssemblyMachine-hours 20,000 14,000Direct labor-hours 2,000 7,000Total fixed manufacturing overhead cost$132,000$57,400Variable manufacturing overhead per machine-hour$2.30 Variable manufacturing overhead per direct labor-hour $3.40 The predetermined overhead rate for the Assembly Department is closest to:

$11.60 per direct labor-hour

Rhome Corporation's relevant range of activity is 2,000 units to 6,000 units. When it produces and sells 4,000 units, its average costs per unit are as follows: Average Cost per UnitDirect materials$5.40Direct labor$3.55Variable manufacturing overhead$1.70Fixed manufacturing overhead$3.00Fixed selling expense$0.60Fixed administrative expense$0.40Sales commissions$1.00Variable administrative expense$0.40 If 5,000 units are sold, the variable cost per unit sold is closest to:

$12.05

Purves Corporation is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $121,000 and 10,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $113,000 and 10,900 total direct labor-hours during the period. The predetermined overhead rate is closest to:

$12.10

Pedregon Corporation has provided the following information: Cost per Unit Cost per PeriodDirect materials$6.35 Direct labor$3.75 Variable manufacturing overhead$1.50 Fixed manufacturing overhead $15,000Sales commissions$0.50 Variable administrative expense$0.55 Fixed selling and administrative expense $4,500 If 4,000 units are sold, the variable cost per unit sold is closest to:

$12.65

Delongis Corporation, a merchandising company, reported the following results for June: Number of units sold 1,200unitsSelling price per unit$221per unitUnit cost of goods sold$97per unitVariable selling expense per unit$12per unitTotal fixed selling expense$7,300 Variable administrative expense per unit$8per unitTotal fixed administrative expense$15,300 Cost of goods sold is a variable cost in this company. The contribution margin for June is:

$124,800

The University Store, Inc. is the major bookseller for four nearby colleges. An income statement for the first quarter of the year is presented below: University Store, Inc.Income StatementFor the Quarter Ended March 31Sales $800,000Cost of goods sold 560,000Gross margin 240,000Selling and administrative expenses Selling$100,000 Administrative 110,000 210,000Net operating income $30,000 On average, a book sells for $40.00. Variable selling expenses are $3.00 per book; the remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the remainder of the administrative expenses are fixed. The contribution margin for the University Store for the first quarter is:

$140,000.

Walmouth Corporation's comparative balance sheet and income statement for last year appear below: Comparative Balance Sheet Ending BalanceBeginning BalanceCash and cash equivalents$40,000 $32,000 Accounts receivable 89,000 79,000 Inventory 48,000 55,000 Prepaid expenses 8,000 11,000 Long-term investments 250,000 210,000 Property, plant, and equipment 550,000 550,000 Less accumulated depreciation 264,000 239,000 Total assets$721,000 $698,000 Accounts payable$58,000 $46,000 Accrued liabilities 15,000 19,000 Income taxes payable 55,000 41,000 Bonds payable 100,000 160,000 Common stock 150,000 140,000 Retained earnings 343,000 292,000 Total liabilities and stockholders' equity$721,000 $698,000 Income StatementSales$870,000Cost of goods sold 450,000Gross margin 420,000Selling and administrative expense 270,000Net operating income 150,000Income taxes 45,000Net income$105,000 The company declared and paid a cash dividend of $54,000 during the year. It did not purchase or dispose of any property, plant, and equipment. It did not issue any bonds or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) operating activities last year was:

$152,000

Thach Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $665,000, variable manufacturing overhead of $3.00 per machine-hour, and 70,000 machine-hours. Recently, Job T321 was completed with the following characteristics: Number of units in the job 30Total machine-hours 90Direct materials$630Direct labor cost$2,880 The unit product cost for Job T321 is closest to:

$154.50

Durphey Corporation has provided the following data concerning last month's operations. Purchases of raw materials$25,000Indirect materials included in manufacturing overhead$4,000Direct labor cost$58,000Manufacturing overhead applied to Work in Process$99,000 BeginningEndingRaw materials inventory$11,000 $17,000 How much is the total manufacturing cost for the month on the Schedule of Cost of Goods Manufactured?

$172,000

Haver Corporation has provided the following data concerning last month's operations. Purchases of raw materials$32,000Indirect materials included in manufacturing overhead$4,000Direct labor cost$58,000Manufacturing overhead applied to Work in Process$84,000 BeginningEndingRaw materials inventory$10,000 $16,000 Work in process inventory$58,000 $74,000 Finished goods inventory$32,000 $49,000 How much is the cost of goods available for sale on the Schedule of Cost of Goods Sold?

$180,000

Tenneson Corporation's cost of goods manufactured for the just completed month was $151,000 and its inventories were as follows: BeginningEndingWork in process inventory$63,000 $66,000 Finished goods inventory$34,000 $48,000 How much was the cost of goods available for sale on the Schedule of Cost of Goods Sold?

$185,000

Foisy, Inc., manufactures and sells two products: Product N0 and Product U8. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected ProductionDirect Labor-Hours Per UnitTotal Direct Labor-HoursProduct N01,0006.06,000Product U82009.01,800Total direct labor-hours 7,800 The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: EstimatedExpected ActivityActivity Cost PoolsActivity MeasuresOverhead CostProduct N0Product U8TotalLabor-relatedDLHs$170,6646,0001,8007,800Machine setupssetups 59,040400500900Order sizeMHs 252,6483,4003,2006,600 $482,352 The total overhead applied to Product U8 under activity-based costing is closest to:(Round your intermediate calculations to 2 decimal places.)

$194,680

Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year: Direct materials$6,000Direct labor$20,000Rent on factory building$15,000Sales salaries$25,000Depreciation on factory equipment$8,000Indirect labor$12,000Production supervisor's salary$15,000 Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:

$2.50 per direct labor-hour

Appleby, Inc., manufactures and sells two products: Product Q9 and Product V8. Data concerning the expected production of each product and the expected total direct labor-hours (DLHs) required to produce that output appear below: Expected Production Direct Labor-Hours Per Unit Total Direct Labor-HoursProduct Q9800 5.0 4,000 Product V81,000 3.0 3,000 Total direct labor-hours 7,000 The direct labor rate is $29.30 per DLH. The direct materials cost per unit is $174.80 for Product Q9 and $168.90 for Product V8. The company is considering adopting an activity-based costing system with the following activity cost pools, activity measures, and expected activity: Activity Cost PoolsActivity MeasuresEstimated Overhead CostExpected ActivityProduct Q9Product V8TotalLabor-relatedDLHs$214,480 4,0003,0007,000Production ordersorders 41,065 300200500Order sizeMHs 192,700 4,2004,0008,200 $448,245 The overhead applied to each unit of Product V8 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

$202.35 per unit

Financial statements for Maraby Corporation appear below: Maraby CorporationBalance SheetDecember 31, Year 2 and Year 1(dollars in thousands) Year 2Year 1Current assets: Cash and marketable securities$220 $190 Accounts receivable, net 190 160 Inventory 140 150 Prepaid expenses 70 80 Total current assets 620 580 Noncurrent assets: Plant & equipment, net 1,180 1,150 Total assets$1,800 $1,730 Current liabilities: Accounts payable$100 $120 Accrued liabilities 100 70 Notes payable, short term 160 160 Total current liabilities 360 350 Noncurrent liabilities: Bonds payable 450 500 Total liabilities 810 850 Stockholders' equity: Common stock, $5 par 160 160 Additional paid-in capital 200 200 Retained earnings 630 520 Total stockholders' equity 990 880 Total liabilities & stockholders' equity$1,800 $1,730 Maraby CorporationIncome StatementFor the Year Ended December 31, Year 2(dollars in thousands)Sales (all on account)$1,960 Cost of goods sold 1,370 Gross margin 590 Selling and administrative expense 230 Net operating income 360 Interest expense 50 Net income before taxes 310 Income taxes (30%) 93 Net income$217 Maraby Corporation's working capital (in thousands of dollars) at the end of Year 2 was closest to:

$260

Freiman Corporation's most recent balance sheet and income statement appear below: Balance SheetDecember 31, Year 2 and Year 1(in thousands of dollars) Year 2Year 1Assets Current assets: Cash$160 $120 Accounts receivable, net 220 240 Inventory 120 130 Prepaid expenses 40 40 Total current assets 540 530 Plant and equipment, net 700 700 Total assets$1,240 $1,230 Liabilities and Stockholders' Equity Current liabilities: Accounts payable$130 $150 Accrued liabilities 90 90 Notes payable, short term 60 70 Total current liabilities 280 310 Bonds payable 280 290 Total liabilities 560 600 Stockholders' equity: Common stock, $2 par value 100 100 Additional paid-in capital 200 200 Retained earnings 380 330 Total stockholders' equity 680 630 Total liabilities & stockholders' equity$1,240 $1,230 Income StatementFor the Year Ended December 31, Year 2(in thousands of dollars)Sales (all on account)$1,310 Cost of goods sold 780 Gross margin 530 Selling and administrative expenses 359 Net operating income 171 Interest expense 35 Net income before taxes 136 Income taxes (30%) 41 Net income$95 The working capital at the end of Year 2 is:

$260 thousand

Housholder Corporation uses a predetermined overhead rate base on machine-hours that it recalculates at the beginning of each year. The company has provided the following data for the most recent year. Estimated total fixed manufacturing overhead from thebeginning of the year$310,000 Estimated activity level from the beginning of the year 20,000machine-hoursActual total fixed manufacturing overhead$338,000 Actual activity level 18,300machine-hours The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to: (Round your intermediate calculations to 2 decimal places.)

$283,650

Macmillan Corporation has provided the following financial data: Balance SheetDecember 31, Year 2 and Year 1AssetsYear 2Year 1Current assets: Cash$156,000 $120,000 Accounts receivable, net 268,000 280,000 Inventory 146,000 130,000 Prepaid expenses 20,000 20,000 Total current assets 590,000 550,000 Plant and equipment, net 732,000 760,000 Total assets$1,322,000 $1,310,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable$175,000 $180,000 Accrued liabilities 46,000 50,000 Notes payable, short term 80,000 80,000 Total current liabilities 301,000 310,000 Bonds payable 190,000 190,000 Total liabilities 491,000 500,000 Stockholders' equity: Common stock, $5 par value 450,000 450,000 Additional paid-in capital 70,000 70,000 Retained earnings 311,000 290,000 Total stockholders' equity 831,000 810,000 Total liabilities & stockholders' equity$1,322,000 $1,310,000 Income Statement—Year 2For the Year Ended December 31, Year 2Sales (all on account)$1,390,000 Cost of goods sold 830,000 Gross margin 560,000 Operating expenses 500,615 Net operating income 59,385 Interest expense 16,000 Net income before taxes 43,385 Income taxes (35%) 15,185 Net income$28,200 Dividends on common stock during Year 2 totaled $7,200. The market price of common stock at the end of Year 2 was $3.69 per share. The company's working capital at the end of Year 2 is:

$289,000

A partial listing of costs incurred at Archut Corporation during September appears below: Direct materials$113,000Utilities, factory$5,000Administrative salaries$81,000Indirect labor$25,000Sales commissions$48,000Depreciation of production equipment$20,000Depreciation of administrative equipment$30,000Direct labor$129,000Advertising$135,000 The total of the product costs listed above for September is:

$292,000

Erkkila Inc. reports that at an activity level of 2,100 machine-hours in a month, its total variable inspection cost is $69,846 and its total fixed inspection cost is $9,072. What would be the average fixed inspection cost per unit at an activity level of 2,400 machine-hours in a month? Assume that this level of activity is within the relevant range.

$3.78

Swinger Corporation's comparative balance sheet appears below: Comparative Balance Sheet Ending BalanceBeginning BalanceAssets: Current assets: Cash and cash equivalents$47,000 $31,000 Accounts receivable 23,000 22,000 Inventory 66,000 64,000 Total current assets 136,000 117,000 Property, plant, and equipment 356,000 338,000 Less accumulated depreciation 184,000 161,000 Net property, plant, and equipment 172,000 177,000 Total assets$308,000 $294,000 Liabilities and stockholders' equity: Current liabilities: Accounts payable$17,000 $16,000 Accrued liabilities 43,000 44,000 Income taxes payable 63,000 61,000 Total current liabilities 123,000 121,000 Bonds payable 83,000 80,000 Total liabilities 206,000 201,000 Stockholders' equity: Common stock 27,000 24,000 Retained earnings 75,000 69,000 Total stockholders' equity 102,000 93,000 Total liabilities and stockholders' equity$308,000 $294,000 The company did not dispose of any property, plant, and equipment during the year. Its net income for the year was $10,000. The net cash provided by (used in) operating activities is:

$32,000

Coatney Inc. has provided the following data for the month of October. There were no beginning inventories; consequently, the direct materials, direct labor, and manufacturing overhead applied listed below are all for the current month. Work In ProcessFinished GoodsCost of Goods SoldTotalDirect materials$3,760 $15,870 $76,130 $95,760 Direct labor 2,400 12,420 59,580 74,400 Manufacturing overhead applied 1,950 6,240 30,810 39,000 Total$8,110 $34,530 $166,520 $209,160 Manufacturing overhead for the month was overapplied by $7,000. The Corporation allocates any underapplied or overapplied manufacturing overhead among work in process, finished goods, and cost of goods sold at the end of the month on the basis of the manufacturing overhead applied during the month in those accounts. The finished goods inventory at the end of October after allocation of any underapplied or overapplied manufacturing overhead for the month is closest to:

$33,410

The Warrel Corporation reported the following data for last year: Increase in Cash and cash equivalents$22,000 Net cash provided by (used in) operating activities$(18,000)Net cash provided by (used in) investing activities$6,000 Based solely on this information, the net cash provided by (used in) financing activities on the statement of cash flows would be:

$34,000

At a volume of 5,000 units, Pwerson Company incurred $32,000 in factory overhead costs, including $14,000 in fixed costs. If volume increases to 6,000 units and both 5,000 units and 6,000 units are within the relevant range, then the company would expect to incur total factory overhead costs of: (Round intermediate calculations to 2 decimal places.)

$35,600

Roca, Inc., manufactures and sells two products: Product M6 and Product X7. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: EstimatedExpected ActivityActivity Cost PoolsActivity MeasuresOverhead CostProduct M6Product X7TotalLabor-relatedDLHs$152,1003,0004,8007,800Production ordersorders 63,035400300700Order sizeMHs 505,4523,7003,6007,300 $720,587 The total overhead applied to Product X7 under activity-based costing is closest to: (Round your intermediate calculations to 2 decimal places.)

$369,879

Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 79,000 machine-hours. The estimated variable manufacturing overhead was $7.38 per machine-hour and the estimated total fixed manufacturing overhead was $2,347,090. The predetermined overhead rate for the recently completed year was closest to:

$37.09 per machine-hour

Calin Corporation has total current assets of $615,000, total current liabilities of $230,000, total stockholders' equity of $1,183,000, total net plant and equipment of $958,000, total assets of $1,573,000, and total liabilities of $390,000. The company's working capital is:

$385,000

Molash Corporation has two manufacturing departments--Machining and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates: MachiningAssemblyTotalEstimated total machine-hours (MHs) 2,000 3,000 5,000Estimated total fixed manufacturing overhead cost$9,400$8,100$17,500Estimated variable manufacturing overhead cost per MH$1.80$2.40 During the most recent month, the company started and completed two jobs--Job B and Job L. There were no beginning inventories. Data concerning those two jobs follow: Job BJob LDirect materials$14,400$7,100Direct labor cost$23,500$6,700Machining machine-hours 1,400 600Assembly machine-hours 1,200 1,800 Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 50% on manufacturing cost to establish selling prices. The calculated selling price for Job L is closest to: (Round your intermediate calculations to 2 decimal places.)

$40,320

Bottum Corporation, a manufacturing Corporation, has provided data concerning its operations for May. The beginning balance in the raw materials account was $20,000 and, the ending balance was $36,000. Raw materials purchases during the month totaled $63,000. Manufacturing overhead cost incurred during the month was $111,000, of which $2,000 consisted of raw materials classified as indirect materials. The direct materials cost for May was:

$45,000

Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total direct labor-hours 40,000Total fixed manufacturing overhead cost$96,000Variable manufacturing overhead per direct labor-hour$3.00 Recently, Job P951 was completed with the following characteristics: Number of units in the job 20Total direct labor-hours 100Direct materials$755Direct labor cost$4,000 The amount of overhead applied to Job P951 is closest to: (Round your intermediate calculations to 2 decimal places.)

$540

Tarrant Corporation has two manufacturing departments--Casting and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: CastingFinishingTotalEstimated total machine-hours (MHs) 1,000 4,000 5,000Estimated total fixed manufacturing overhead cost$5,700$11,200$16,900Estimated variable manufacturing overhead cost per MH$1.30$2.90 Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. The departmental predetermined overhead rate in the Casting Department is closest to:

$7.00

Pedregon Corporation has provided the following information: Cost per Unit Cost per PeriodDirect materials$6.35 Direct labor$3.75 Variable manufacturing overhead$1.50 Fixed manufacturing overhead $15,000Sales commissions$0.50 Variable administrative expense$0.55 Fixed selling and administrative expense $4,500 If the selling price is $20.60 per unit, the contribution margin per unit sold is closest to:

$7.95

At the beginning of December, Altro Corporation had $26,000 of raw materials on hand. During the month, the Corporation purchased an additional $76,000 of raw materials. During December, $72,000 of raw materials were requisitioned from the storeroom for use in production. The credits entered in the Raw Materials account during the month of December total:

$72,000

Krier Corporation uses a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $738,000 and 30,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $792,000 and 31,500 total direct labor-hours during the period. The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to: (Round your intermediate calculations to 2 decimal places.)

$774,900

Mccaskell Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: Average Cost per UnitDirect materials$6.30Direct labor$3.65Variable manufacturing overhead$1.75Fixed manufacturing overhead$9.90Fixed selling expense$2.25Fixed administrative expense$1.80Sales commissions$1.00Variable administrative expense$0.50 If 8,000 units are produced, the total amount of direct manufacturing cost incurred is closest to:

$79,600

Salsedo Corporation's balance sheet and income statement appear below: Comparative Balance Sheet Ending BalanceBeginning BalanceAssets: Cash and cash equivalents$31 $33 Accounts receivable 24 30 Inventory 53 47 Property, plant, and equipment 461 390 Less accumulated depreciation 306 256 Total assets$263 $244 Liabilities and stockholders' equity: Accounts payable$42 $49 Accrued liabilities 16 17 Income taxes payable 39 40 Bonds payable 75 90 Common stock 53 50 Retained earnings 38 (2)Total liabilities and stockholders' equity$263 $244 Income StatementSales$634Cost of goods sold 400Gross margin 234Selling and administrative expense 174Net operating income 60Gain on sale of equipment 10Income before taxes 70Income taxes 21Net income$49 Cash dividends were $9. The company sold equipment for $15 that was originally purchased for $10 and that had accumulated depreciation of $5. It did not issue any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) operating activities for the year was:

$85

Megan Corporation's net income last year was $98,000. Changes in the company's balance sheet accounts for the year appear below: Increases(Decreases)Asset and Contra-Asset Accounts: Cash and cash equivalents$(3,000)Accounts receivable$(14,000)Inventory$3,000 Prepaid expenses$(7,000)Long-term investments$80,000 Property, plant, and equipment$55,000 Accumulated depreciation$58,000 Liability and Equity Accounts: Accounts payable$0 Accrued liabilities$15,000 Income taxes payable$(11,000)Bonds payable$(30,000)Common stock$20,000 Retained earnings$62,000 The company paid a cash dividend of $36,000 and it did not dispose of any long-term investments or property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The free cash flow for the year was:

$87,000

Boesenhofer, Inc., manufactures and sells two products: Product N6 and Product N7. The company has an activity-based costing system with the following activity cost pools, activity measures, and expected activity: EstimatedExpected ActivityActivity Cost PoolsActivity MeasuresOverhead CostProduct N6Product N7TotalLabor-relatedDLHs$345,0602,1005,0007,100Machine setupssetups 128,5346008001,400Order sizeMHs 107,5984,1003,8007,900 $581,192 The activity rate for the Machine Setups activity cost pool is closest to:

$91.81 per setup

Klicker Corporation's most recent balance sheet appears below: Comparative Balance Sheet Ending BalanceBeginning BalanceAssets: Current assets: Cash and cash equivalents$27 $30 Accounts receivable 37 31 Inventory 61 58 Total current assets 125 119 Property, plant, and equipment 593 480 Less accumulated depreciation 223 205 Net property, plant, and equipment 370 275 Total assets$495 $394 Liabilities and stockholders' equity: Current liabilities: Accounts payable$39 $38 Accrued liabilities 15 18 Income taxes payable 28 28 Total current liabilities 82 84 Bonds payable 107 120 Total liabilities 189 204 Stockholders' equity: Common stock 34 30 Retained earnings 272 160 Total stockholders' equity 306 190 Total liabilities and stockholders' equity$495 $394 The company's net income for the year was $152 and it did not issue any bonds or repurchase any of its common stock during the year. Cash dividends were $40. The net cash provided by (used in) financing activities for the year was:

($49)

Laverde Corporation has provided the following data: Year 2Year 1Inventory$185,000 $200,000 Total assets$1,489,000 $1,470,000 Sales$1,220,000 The company's total asset turnover for Year 2 is closest to:

0.82

Excerpts from Sydner Corporation's most recent balance sheet appear below: Year 2Year 1Current assets: Cash$140 $160 Accounts receivable, net 210 230 Inventory 240 200 Prepaid expenses 10 10 Total current assets$600 $600 Total current liabilities$360 $330 Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900. The acid-test (quick) ratio at the end of Year 2 is closest to:

0.97

Fayer Corporation has provided the following financial data: Balance SheetDecember 31, Year 2 and Year 1AssetsYear 2Year 1Current assets: Cash$161,000 $180,000 Accounts receivable, net 110,000 130,000 Inventory 181,000 160,000 Prepaid expenses 57,000 70,000 Total current assets 509,000 540,000 Plant and equipment, net 1,044,000 960,000 Total assets$1,553,000 $1,500,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable$188,000 $160,000 Accrued liabilities 57,000 60,000 Notes payable, short term 36,000 40,000 Total current liabilities 281,000 260,000 Bonds payable 200,000 200,000 Total liabilities 481,000 460,000 Stockholders' equity: Common stock, $4 par value 200,000 200,000 Additional paid-in capital 80,000 80,000 Retained earnings 792,000 760,000 Total stockholders' equity 1,072,000 1,040,000 Total liabilities & stockholders' equity$1,553,000 $1,500,000 Income StatementFor the Year Ended December 31, Year 2Sales (all on account)$1,220,000 Cost of goods sold 760,000 Gross margin 460,000 Operating expenses 389,846 Net operating income 70,154 Interest expense 14,000 Net income before taxes 56,154 Income taxes (35%) 19,654 Net income$36,500 Dividends on common stock during Year 2 totaled $4,500. The market price of common stock at the end of Year 2 was $10.88 per share. The company's equity multiplier at the end of Year 2 is closest to:

1.45

Excerpts from Colter Corporation's most recent balance sheet appear below: Year 2Year 1Current assets: Cash$90 $120 Accounts receivable, net 100 110 Inventory 170 160 Prepaid expenses 40 40 Total current assets$400 $430 Total current liabilities$320 $290 Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. The accounts receivable turnover for Year 2 is closest to:

11.52

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement: Year 2Year 1Cash$74,000 $130,000 Accounts receivable, net$255,000 $240,000 Inventory$173,000 $180,000 Total current assets$564,000 $610,000 Total assets$1,350,000 $1,330,000 Accounts payable$170,000 $160,000 Total liabilities$633,000 $620,000 Total stockholders' equity$717,000 $710,000 Sales (all on account)$1,290,000 Cost of goods sold$700,000 The company's operating cycle for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)

162.0 days

Garrott Corporation's total assets were $1,505,000 at the end of Year 2 and $1,520,000 at the end of Year 1. Its total stockholders' equity was $1,197,000 at the end of Year 2 and $1,180,000 at the end of Year 1. Income StatementFor the Year Ended December 31, Year 2Sales (all on account)$1,340,000 Cost of goods sold 830,000 Gross margin 510,000 Operating expenses 465,143 Net operating income 44,857 Interest expense 9,000 Net income before taxes 35,857 Income taxes (30%) 10,757 Net income$25,100 The company's return on equity for Year 2 is closest to:

2.11%

Lasch Corporation has provided the following financial data from its balance sheet and income statement: Year 2Year 1Total assets$1,333,000 $1,320,000 Accounts payable$158,000 $160,000 Accrued liabilities$43,000 $40,000 Notes payable, short term$47,000 $50,000 Bonds payable$250,000 $250,000 Total liabilities$498,000 $500,000 Total stockholders' equity$835,000 $820,000 Income StatementFor the Year Ended December 31, Year 2Sales (all on account)$1,250,000 Cost of goods sold 840,000 Gross margin 410,000 Operating expenses 366,286 Net operating income 43,714 Interest expense 18,000 Net income before taxes 25,714 Income taxes (30%) 7,714 Net income$18,000 The company's times interest earned ratio for Year 2 is closest to:

2.43

Settles Corporation has provided the following financial data: Balance SheetDecember 31, Year 2 and Year 1AssetsYear 2Year 1Current assets: Cash$142,000 $110,000 Accounts receivable, net 104,000 120,000 Inventory 119,000 120,000 Prepaid expenses 37,000 40,000 Total current assets 402,000 390,000 Plant and equipment, net 717,000 720,000 Total assets$1,119,000 $1,110,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable$156,000 $180,000 Accrued liabilities 84,000 70,000 Notes payable, short term 66,000 60,000 Total current liabilities 306,000 310,000 Bonds payable 250,000 250,000 Total liabilities 556,000 560,000 Stockholders' equity: Common stock, $4 par value 240,000 240,000 Additional paid-in capital 90,000 90,000 Retained earnings 233,000 220,000 Total stockholders' equity 563,000 550,000 Total liabilities & stockholders' equity$1,119,000 $1,110,000 Income StatementFor the Year Ended December 31, Year 2Sales (all on account)$1,360,000 Cost of goods sold 850,000 Gross margin 510,000 Operating expenses 462,692 Net operating income 47,308 Interest expense 19,000 Net income before taxes 28,308 Income taxes (35%) 9,908 Net income$18,400 Dividends on common stock during Year 2 totaled $5,400. The market price of common stock at the end of Year 2 was $5.89 per share. The company's return on equity for Year 2 is closest to:

3.31%

Neef Corporation has provided the following financial data from its balance sheet and income statement: Year 2Year 1Total assets$1,302,000 $1,330,000 Total stockholders' equity$885,000 $880,000 Income StatementFor the Year Ended December 31, Year 2Sales (all on account)$1,420,000 Cost of goods sold 890,000 Gross margin 530,000 Operating expenses 493,000 Net operating income 37,000 Interest expense 17,000 Net income before taxes 20,000 Income taxes (35%) 7,000 Net income$13,000 The company's gross margin percentage for Year 2 is closest to:

37.3%

Excerpts from Colter Corporation's most recent balance sheet appear below: Year 2Year 1Current assets: Cash$90 $120 Accounts receivable, net 100 110 Inventory 170 160 Prepaid expenses 40 40 Total current assets$400 $430 Total current liabilities$320 $290 Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720. The inventory turnover for Year 2 is closest to:

4.36

Ribaudo Corporation has provided the following financial data from its balance sheet and income statement: Year 2Year 1Cash$74,000 $130,000 Accounts receivable, net$255,000 $240,000 Inventory$173,000 $180,000 Total current assets$564,000 $610,000 Total assets$1,350,000 $1,330,000 Accounts payable$170,000 $160,000 Total liabilities$633,000 $620,000 Total stockholders' equity$717,000 $710,000 Sales (all on account)$1,290,000 Cost of goods sold$700,000 The company's accounts receivable turnover for Year 2 is closest to:

5.21

Data from Dunshee Corporation's most recent balance sheet appear below: Year 2Year 1Current assets: Cash$130 $100 Accounts receivable, net 270 290 Inventory 90 110 Prepaid expenses 10 10 Total current assets$500 $510 Total current liabilities$230 $220 Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730. The average sale period for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)

50.0 days

Pascarelli Corporation's inventory at the end of Year 2 was $122,000 and its inventory at the end of Year 1 was $150,000. Cost of goods sold amounted to $870,000 in Year 2. The company's average sale period for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)

57.0 days

Lucas Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below: Beginning work in process inventory: Units in beginning work in process inventory 900 Materials costs$9,600 Conversion costs$7,700 Percent complete with respect to materials 60%Percent complete with respect to conversion 45%Units started into production during the month 8,100 Units transferred to the next department during the month 6,900 Materials costs added during the month$115,800 Conversion costs added during the month$120,500 Ending work in process inventory: Units in ending work in process inventory 2,100 Percent complete with respect to materials 75%Percent complete with respect to conversion 20% What are the equivalent units for materials for the month in the first processing department?

8,475

Which one of the following statements about book value per share is most correct?

Book value per common share is based on past transactions whereas the market price of a share of stock mainly reflects what investors expect to happen in the future.

Tomlin Corporation prepares its statement of cash flows using the indirect method. Which of the following would be subtracted from net income in the operating activities section of the statement? Increase inAccountsReceivableDecrease inAccruedLiabilitiesA)YesYesB)YesNoC)NoYesD)NoNo

Choice A

The cost of direct materials is classified as a: Conversion costPrime costA)NoNoB)YesNoC)NoYesD)YesYes

Choice C

The costs of direct materials are classified as: Conversion costManufacturing costPrime costA)YesYesYesB)NoNoNoC)YesYesNoD)NoYesYes

Choice D

Wages paid to the supervisor of the warehouse where raw materials and parts are temporarily stored before being used in production is considered an example of: Direct LaborPeriod CostA)YesYesB)YesNoC)NoYesD)NoNo

Choice D

In a job-order costing system that is based on machine-hours, which of the following formulas is correct?

Predetermined overhead rate = Estimated manufacturing overhead ÷ Estimated machine-hours

Sand Company has an acid-test ratio of 0.8. Which of the following actions would improve the acid-test ratio?

Sell some equipment for cash.

Excerpts from Aultman Corporation's comparative balance sheet appear below: Ending BalanceBeginning BalanceCash and cash equivalents$62,000 $29,000 Inventory$371,000 $345,000 Accounts payable$71,000 $73,000 Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?

The change in Inventory is subtracted from net income; The change in Accounts Payable is subtracted from net income

Under the weighted-average method, the cost of units transferred out of a department is computed as follows for a cost category:

Units transferred to the next department × Cost per equivalent unit

Which of the following would be added to net income in the operating activities section of a statement of cash flows prepared using the indirect method?

a decrease in accrued liabilities.

An increase in the Inventory account from $10,000 at the beginning of the year to $15,000 at the end of the year would be shown on the statement of cash flows prepared under the indirect method as:

a deduction from net income of $5,000 in order to arrive at net cash provided by operating activities.

The salary paid to the president of a company would be classified on the income statement as a(n):

administrative expense.

Manufacturing overhead includes:

all manufacturing costs except direct labor and direct materials.

An increase in accrued liabilities of $1,000 during a year would be shown on the company's statement of cash flows prepared under the indirect method as:

an addition to net income of $1,000 in order to arrive at net cash provided by operating activities.

Direct costs:

can be easily traced to a particular cost object.

All of the following are examples of product costs except:

depreciation on the company's retail outlets.

In activity-based costing, unit product costs computed for external financial reports include:

direct materials, direct labor, and manufacturing overhead.