Reference no: EM1390272

Asignación Individual (T3)

AI 2 (Relevant Cost/Ratios Analysis)

1. The current ratio for a company with current assets of $70,000, quick assets of $30,000, total assets of $150,000 current liabilities of $50,000 and net sales of $80,000 would be:

A. 0.20                        B. 1.40                        C. 3.00                        D. 1.00

 

2. Rick's has a cash balance of $80,000; short-term investments of $20,000; net receivables of $60,000; and inventory of $450,000.  Current liabilities total $200,000.  Ricks' acid test (quick ratio) is within:

A. 3.05 to 1                 B. 2.25 to 1     C. 0.80 to 1     D. 0.54 to 1

 

3. Isaiah Company has net income of $720,000, beginning total assets of $2,100,000, and ending total assets of $2,300,000.  Isaiah's return on total assets is:

A. 32.7%                     B. 11.2%         C. 3.1%                       D. 31.3%

 

4. Tammy Company has a beginning accounts receivable balance of $65,000 and an ending accounts receivable balance of $60,000.  Net credit sales are $250,000. Tammy's accounts receivable turnover rate is:

A. 3.846                      B. 4.167          C. 4.000          D. 2.000

 

5. With a beginning accounts receivable balance of $80,000; an ending accounts receivable balance of $120,000; and net credit sales of $900,000, the accounts receivable turnover is:

A. 9.00                        B. 4.50                        C. 7.50                        D. 11.25

 

6. Topiary's Unlimited has a cost of goods sold of $1,600,000.  The beginning merchandise inventory was $195,000 and the ending merchandise inventory is $205,000.  Topiary's merchandise inventory turnover ratio is:

A. 8.21 times               B. 7.80 times.  C. 8.00 times   D. 9.00 times.

 

7. Amanda's has a cost of goods sold of $1,900,000.  The beginning and ending merchandise inventories   are $133,000 and $125,000, respectively.  Amanda's merchandise inventory turnover ratio is:

A. 65.5 times               B. 33.8 times   C. 14.7 times   D. 29.4 times

 

8.  Walker Clothing Store had a balance in the Accounts Receivable account of $390,000 at the beginning of the year and a balance of $410,000 at the end of the year. Net credit sales during the year amounted to $2,000,000. The average collection period of the receivables in terms of days was

A. 30 days                   B. 365 days     C. 146 days     D. 73 days

 

9. Parr Hardware Store had net credit sales of $6,500,000 and cost of goods sold of $5,000,000 for the year. The Accounts Receivable balances at the beginning and end of the year were $600,000 and $700,000, respectively. The receivables turnover was

A. 7.7 times                 B. 10.8 times   C. 9.3 times     D.10 times

 

10. Waters Department Store had net credit sales of $16,000,000 and cost of goods sold of $12,000,000 for the year. The average inventory for the year amounted to $2,000,000. Inventory turnover for the year is

    A. 8 times                            B. 14 times      C. 6 times        D. 4 times

 

11. Waters Department Store had net credit sales of $16,000,000 and cost of goods sold of $12,000,000 for the year. The average inventory for the year amounted to $2,000,000. The average number of days in inventory during the year was

A. 91 days                   B. 61 days       C. 46 days       D. 26 days

 

12. The current assets of Kile Company are $150,000. The current liabilities are $100,000. The current ratio expressed as a proportion is

A. 150%                      B. 1.5: 1          C. .67: 1          D. $150,000 ÷ $100,000

 

13. A company has a receivables turnover of 10 times. The average net receivables during the period are $400,000. What is the amount of net credit sales for the period?

A. $40,000                  B. $4,000,000 C. $480,000    D. Cannot be determined from the information given

 

14. Gold Clothing Store had a balance in the Accounts Receivable account of $820,000 at the beginning of the year and a balance of $880,000 at the end of the year. Net credit sales during the year amounted to $7,650,000. The receivables turnover ratio was

A. 9.0 times                 B. 4.5 times     C. 8.7 times     D. 9.3 times

 

15. Gold Clothing Store had a balance in the Accounts Receivable account of $810,000 at the beginning of the year and a balance of $850,000 at the end of the year. Net credit sales during the year amounted to $6,640,000. The average collection period of the receivables in terms of days was

A. 91.3 days                B. 45.6 days    C. 30 days       D. 46.7 days

 

16. The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.

Assets

Cash and short-term investments        $  45,000

Accounts receivable (net)                     25,000

Inventory                                           20,000

Property, plant and equipment              210,000

            Total Assets                         $300,000

 

Liabilities and Stockholders' Equity

Current liabilities                                   $  50,000

Long-term liabilities                                  90,000

Stockholders' equity-common                160,000

            Total Liabilities and Stockholders' Equity     $300,000

 

                           Income Statement

Sales                                                    $ 120,000

Cost of goods sold                                     66,000

Gross margin                                            54,000

Operating expenses                                    30,000

            Net income                                 $  24,000

 

Number of shares of common stock   6,000

Market price of common stock              $20

Dividends per share                             .50

 

What is the current ratio for Soho?

A. 1.80                        B. 1.30                        C. 1.40                        D. .64

 

17. The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.

Assets

Cash and short-term investments             $  45,000

Accounts receivable (net)                          25,000

Inventory                                                20,000

Property, plant and equipment                   210,000

            Total Assets                               $300,000

 

Liabilities and Stockholders' Equity

Current liabilities                                       $ 50,000

Long-term liabilities                                      90,000

Stockholders' equity-common                    160,000

            Total Liabilities and Stockholders' Equity    $300,000

          Income Statement

Sales                           $ 120,000

Cost of goods sold           66,000

Gross margin                   54,000

Operating expenses          30,000

            Net income      $   24,000

 

Number of shares of common stock   6,000

Market price of common stock             $20

Dividends per share                           .50

 

What is the receivables turnover for Soho?

A. 2.1 times                 B. 2 times        C. 4.8 times     D. 9.6 times

 

18. The following financial statement information is available for Houser Corporation:

                                  2011               2010      

Inventory                $ 44,000        $ 43,000

Current assets             81,000         106,000

Total assets              432,000        358,000

Current liabilities       30,000            36,000

Total liabilities         102,000            88,000

 

The current ratio for 2011 is

A. .37:1                       B.  2.7:1          C. .79:1                       D. 4.24:1

 

19. Alvarez Company is considering the following alternatives:

                            Alternative A            Alternative B

Revenues               $50,000                     $60,000

Variable costs          30,000                      30,000

Fixed costs              10,000                      16,000

 

What is the incremental profit?

A. $10,000                  B. $0               C. $6,000        D. $4,000

 

20.  Seville Company manufactures a product with a unit variable cost of $42 and a unit sales price of $75. Fixed manufacturing costs were $80,000 when 10,000 units were produced and sold, equating to $8 per unit. The company has a one-time opportunity to sell an additional 2,000 units at $55 each in an international market which would not affect its present sales. The company has sufficient capacity to produce the additional units. How much is the relevant income effect of accepting the special order?

A. $84,000                  B. $10,000      C. $40,000      D. $26,000

 

21. It costs Lannon Fields $14 of variable costs and $6 of allocated fixed costs to produce an industrial trash can that sells for $30. A buyer in Mexico offers to purchase 3,000 units at $18 each. Lannon Fields has excess capacity and can handle the additional production. What effect will acceptance of the offer have on net income?

A. Decrease $6,000     B. Increase $6,000      C. Increase $54,000    D. Increase $12,000

 

22. It costs Fortune Company $10 of variable and $4 of fixed costs to produce one bathroom scale, which normally sells for $28. A foreign wholesaler offers to purchase 1,000 scales at $12 each. Fortune would incur special shipping costs of $1 per scale if the order were accepted. Fortune has sufficient unused capacity to produce the 1,000 scales. If the special order is accepted, what will be the effect on net income?

A. $1,000 increase      B. $1,000 decrease      C. $2,000 decrease      D. $12,000 increase

 

23. A company contemplating the acceptance of a special order has the following unit cost behavior, based on 10,000 units:

 Direct materials          $  4

 Direct labor                   10

 Variable overhead            8

 Fixed overhead                6

A foreign company wants to purchase 1,000 units at a special unit price of $25. The normal price per unit is $40. In addition, a special stamping machine will have to be purchased for $2,000 in order to stamp the foreign company's name on the product. The incremental income (loss) from accepting the order is

A. $3,000                    B. $1,000        C. $(3,000)      D. $(1,000)

 

24. Chapman Company manufactures widgets. Embree Company has approached Chapman with a proposal to sell the company widgets at a price of $80,000 for 100,000 units. Chapman is currently making these components in its own factory. The following costs are associated with this part of the process when 100,000 units are produced:

Direct materials              $  31,000

Direct labor                       29,000

Manufacturing overhead     40,000

Total                               $100,000

The manufacturing overhead consists of $16,000 of costs that will be eliminated if the components are no longer produced by Chapman. From Chapman's point of view, how much is the incremental cost or savings if the widgets are bought instead of made?

A. $20,000 incremental savings          B. $4,000 incremental cost    

C. $4,000 incremental savings            D. $20,000 incremental cost

 

25. Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $36 each. If Truckel makes the wickets, variable costs are $22 per unit. Fixed costs are $16 per unit; however, $10 per unit is unavoidable. Should Truckel make or buy the wickets?

A. Buy; savings = $50,000                 B. Buy; savings = $20,000     

C. Make; savings = $40,000               D. Make; savings = $20,000

 

Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows:

                                        Wood          Aluminum       Hard Rubber       Total           

Sales                           500,000            $200,000         $ 65,000          765,000

Variable expenses          325,000        140,000             58,000           523,000

Contribution margin       175,000           60,000               7,000          242,000

Fixed expenses                 75,000           35,000             22,000           132,000

Net income (loss)        $100,000        $ 25,000          $(15,000)         $110,000

 

26.  Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?

A. $125,000                B. $103,000    C. $105,000    D. $140,000

 

27. Assume all of the fixed expenses for the hard rubber line are avoidable. What will be total net income if that line is dropped?

A. $125,000                B. $103,000    C. $105,000    D. $140,000

 

28. If the total net income after dropping the hard rubber line is $105,000, hard rubber's avoidable fixed expenses were

A. $20,000                  B. $2,000       C. $7,000        D. $5,000