Reference no: EM132593586

Problem 1: Henson Company began the year with retained earnings of $380,000. During the year, the company recorded revenues of $500,000, expenses of $380,000, and paid dividends of $40,000. What was Henson's retained earnings at the end of the year??

Option 1: ?$460,000

Option 2: ?$500,000

Option 3: ?$840,000

Option 4: ?$540,000

Problem 2: Differences between a job order cost system and a process cost system include all of the following except the:?

Option 1: ?unit cost computations.

Option 2: ?documents used to track costs.

Option 3: ?point at which costs are totaled.

Option 4: ?flow of costs.

Problem 3: Danner Corporation reported net sales of $650,000, $720,000, and $780,000 in the years 2016, 2017, and 2018, respectively. If 2016 is the base year, what percentage do 2018 sales represent of the base??

Option 1: ?20%

Option 2: ?120%

Option 3: ?108%

Option 4: ?83%

Problem 4: An activity-based overhead rate is computed as follows:?

?Option 1: actual overhead divided by estimated use of cost drivers.

Option 2: ?actual overhead divided by actual use of cost drivers.

Option 3: ?estimated overhead divided by estimated use of cost drivers.

?Option 4: estimated overhead divided by actual use of cost drivers.

Problem 5: If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then:?

Option 1: ?the order will likely be rejected.

Option 2: ?the order will likely be accepted.

Option 3: ?fixed costs are not relevant.

Option 4: ?only variable costs are relevant.

Problem 6: Which statement is correct??

Option 1: ?The use of the cash basis of accounting violates both the revenue recognition and expense recognition principles.

Option 2: ?As long as management is ethical, there are no problems with using the cash basis of accounting.

Option 3: ?As long as a company consistently uses the cash basis of accounting, generally accepted accounting principles allow its use.

Option 4: ?The cash basis of accounting is objective because no one can be certain of the amount of revenue until the cash is received.

Problem 7: At September 1, 2017, Baxter Inc. reported Retained Earnings of $423,000. During the month, Baxter generated revenues of $60,000, incurred expenses of $36,000, purchased equipment for $15,000 and paid dividends of $6,000. What is the balance in Retained Earnings at September 30, 2017??

?Option 1: $24,000 credit

Option 2: ?$441,000 credit

Option 3: ?$423,000 debit

Option 4: ?$426,000 credit

Problem 8: In performing a vertical analysis, the base for sales revenues on the income statement is:?

Option 1: ?net sales.

Option 2: ?net income.

?Option 3: cost of goods available for sale.

Option 4: ?sales revenue.

Problem 9: Which of the following statements is not true??

Option 1: ?Operating leverage refers to the extent to which a company's net income reacts to a given change in sales.

Option 2: ?When a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease.

?Option 3: Companies that have higher fixed costs relative to variable costs have higher operating leverage.

Option 4: ?When a company's sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly.

Problem 10: Hollis Industries produces flash drives for computers, which it sells for $20 each. Each flash drive costs $13 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $2 per unit for a total of $1,000 for the month. How much is the contribution margin ratio??

Option 1: ?25%

Option 2: ?65%

Option 3: ?35%

Option 4: ?75%