Reference no: EM13974659

Part 1

1. Krejci Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $41,430 per month plus $2,419 per flight plus $6 per passenger. The company expected its activity in March to be 84 flights and 222 passengers, but the actual activity was 81 flights and 220 passengers. The actual cost for plane operating costs in March was $239,870. What would the plane operating costs in the planning budget for March be closest to?

A. $245,958
B. $238,689
C. $239,870
D. $248,754

2. Petroski Natural Dying Corporation measures its activity in terms of skeins of yarn dyed. Last month, the budgeted level of activity was 19,700 skeins and the actual level of activity was 19,900 skeins. The company's owner budgets for dye costs, a variable cost, at $0.67 per skein. The actual dye cost last month was $13,910. In the company's flexible budget performance report for last month, what would have been the spending variance for dye costs?

A. $577 U
B. $140 U
C. $711 U
D. $134 U

3. Weston Corporation is considering eliminating a department that has a contribution margin of $70,000 and $140,000 in fixed costs. Of the fixed costs, $100,000 cannot be avoided. What would the effect of eliminating this department on Weston's overall net operating income be?

A. A decrease of $30,000
B. A decrease of $70,000
C. An increase of $30,000
D. An increase of $70,000

4. Miolen Corporation has provided the following data concerning its direct labor costs for June:

What would the Labor Efficiency Variance for June be recorded as?

A. Debit of $46,272
B. Credit of $46,272
C. Debit of $50,128
D. Credit of $50,128

5. Foster Hotel bases its budgets on guest-days. The hotel's static budget for December appears below:

What should be the total overhead cost at an activity level of 7,500 guest-days per month?

A. $206,040
B. $216,140
C. $215,140
D. $227,250

6. Gierlach Beet Processors, Inc. processes sugar beets in batches. A batch of sugar beets costs $27 to buy from farmers and $17 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $27 or processed further for $14 to make the end product industrial fiber that is sold for $34. The beet juice can be sold as is for $32 or processed further for $29 to make the end product refined sugar that is sold for $58. How much more profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?

A. $(20)
B. $(3)
C. $(47)
D. $(25)

7. A study has been conducted to determine if one of the departments in Barry Corporation should be discontinued. The contribution margin in the department is $60,000 per year. Fixed expenses charged to the department are $75,000 per year. It is estimated that $34,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, what would happen to the company's overall net operating income?

A. Increase by $15,000 per year
B. Decrease by $26,000 per year
C. Decrease by $15,000 per year
D. Increase by $26,000 per year

8. Hairr Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $9.50 per machine-hour and fixed manufacturing overhead cost of $947,672 per period. If the denominator level of activity is 8,900 machine-hours, what would the predetermined overhead rate be?

A. $115.98
B. $106.48
C. $9.50
D. $950.00

9. Hoppy Corporation compares monthly operating results to a static budget prepared at the beginning of the month. When the actual level of activity is less than budgeted, which of the following would be true?

A. Variable costs would show favorable variances.
B. Variable costs would show unfavorable variances.
C. Fixed costs would show unfavorable variances.
D. Fixed costs would show favorable variances.

10. Akey Hospital bases its budgets on patient-visits. The hospital's static budget for March appears below:

What should be the total overhead cost at an activity level of 3,000 patient-visits per month?

A. $97,800
B. $92,100
C. $88,020
D. $92,640

11. What does Throughput Time consist of?

A. Inspection Time and Move Time
B. Process Time
C. Process Time, Inspection Time, and Move Time
D. Process Time, Inspection Time, Move Time, and Queue Time

12. A study has been conducted to determine if Product A should be dropped. Sales of the product total $400,000 per year; variable expenses total $270,000 per year. Fixed expenses charged to the product total $160,000 per year. The company estimates that $70,000 of these fixed expenses is not avoidable even if the product is dropped. If Product A is dropped, what would happen to the company's overall net operating income?

A. Increase by $40,000 per year
B. Decrease by $30,000 per year
C. Decrease by $40,000 per year
D. Increase by $30,000 per year

13. When a multi-product factory operates at full capacity, decisions must be made about which products to emphasize. In making such decisions, products should be ranked based on what?

A. Celling price per unit
B. Contribution margin per unit
C. Contribution margin per unit of the constraining resource
D. Unit sales volume

14. Gramajo Corporation's standard wage rate is $10.10 per direct labor-hour (DLH) and according to the standards, each unit of output requires 3.4 DLHs. In February, 2,400 units were produced, the actual wage rate was $9.40 per DLH, and the actual hours were 7,920 DLHs. In the journal entry to record the incurrence of direct labor costs in February, what would the Work in Process entry consist of?

A. Debit of $74,448
B. Credit of $82,416
C. Credit of $74,448
D. Debit of $82,416

15. Lusk Corporation produces and sells 20,000 units of Product X each month. The selling price of Product X is $30 per unit, and variable expenses are $21 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $50,000 of the $250,000 in fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, what would happen to the company's overall net operating income?

A. Decrease by $20,000 per month
B. Decrease by $70,000 per month
C. Increase by $20,000 per month
D. Increase by $70,000 per month

16. Sekuterski Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $45,700 per month plus $2,892 per flight plus $4 per passenger. The company expected its activity in November to be 81 flights and 283 passengers, but the actual activity was 80 flights and 282 passengers. The actual cost for plane operating costs in November was $286,360. What would the plane operating costs in the flexible budget for November be closest to?

A. $286,360
B. $277,614
C. $278,188
D. $281,084

17. During the month of May, Marian Manufacturing Corporation purchased materials that had a total standard cost of $37,000. The Materials Price Variance on these materials was $6,000 favorable. What summary journal entry would Domino make to record this purchase and variance for May?

18. Comparing actual results to a budget based on the actual activity for the period is possible with the use of a

A. master budget.
B. monthly budget.
C. flexible budget.
D. rolling budget.

19. The following labor standards have been established for a particular product:

The following data pertain to operations concerning the product for the last month:

What is the labor efficiency variance for the month?

A. $16,577 F
B. $16,029 F
C. $19,017 F
D. $19,017 U

20. Fabio Corporation is considering eliminating a department that has a contribution margin of $30,000 and $60,000 in fixed costs. Of the fixed costs, $15,000 cannot be avoided. What would the effect of eliminating this department on Fabio's overall net operating income be?

A. An increase of $15,000
B. A decrease of $15,000
C. An increase of $30,000
D. A decrease of $30,000

Part 2

1. What is the ratio of total cash, marketable securities, accounts receivable, and short-term notes to current liabilities?

A. The current ratio
B. The acid-test ratio
C. Working capital
D. The debt-to-equity ratio

2. Spomer Corporation's inventory at the end of Year 2 was $114,000 and its inventory at the end of Year 1 was $120,000. Cost of goods sold amounted to $710,000 in Year 2. What is the company's inventory turnover for Year 2 closest to?

A. 6.23
B. 5.92
C. 6.07
D. 1.05

3. The Moab Corporation had sales of $300,000 and expenses of $175,000 last year. All sales were cash sales and all expenses were cash expenses. Moab Corporation's tax rate is 30%. How much was the aftertax net cash inflow at Moab last year?

A. $87,500
B. $210,000
C. $52,500
D. $37,500

4. (Ignore income taxes in this problem.) Neighbors Corporation is considering a project that would require an investment of $279,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows:

The scrap value of the project's assets at the end of the project would be $15,000. The cash inflows occur evenly throughout the year. How long is the payback period of the project closest to?

A. 2.5 years
B. 2.6 years
C. 2.0 years
D. 1.9 years

5. Jester Corporation's most recent income statement appears below:

The beginning balance of total assets was $360,000 and the ending balance was $320,000. What percentage is the return on total assets closest to?

A. 32.4%
B. 18.5%
C. 22.6%
D. 26.5%

6. An increase in accounts receivable of $1,000 over the course of a year would be shown on the company's statement of cash flows prepared under the indirect method as

A. a deduction from net income of $1,000 in order to arrive at net cash provided by operating activities.
B. an addition of $1,000 under financing activities.
C. an addition to net income of $1,000 in order to arrive at net cash provided by operating activities.
D. a deduction of $1,000 under financing activities.

7. 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. How long is the company's average sale period (turnover in days) for Year 2 closest to?

A. 51.2 days
B. 32.3 days
C. 57.0 days
D. 230.1 days

8. 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.

Which is the current ratio closest to?

A. 1.31
B. 0.36
C. 0.33
D. 0.76

9. Kopas Corporation has provided the following data:

What is the inventory turnover for this year closest to?

A. 1.03
B. 3.09
C. 0.98
D. 3.05

10. Irawaddy Company, a retailer, had a cost of goods sold of $230,000 last year. The beginning inventory balance was $24,000 and the ending inventory balance was $22,000. How long was the company's average sale period closest to?

A. 36.5 days
B. 73.0 days
C. 38.1 days
D. 34.9 days

11. Tani Corporation's most recent balance sheet appears below:

The company's net income for the year was $18 and it did not sell or retire any property, plant, and equipment during the year. Cash dividends were $4. What was the net cash provided by (used in) investing activities for the year?

A. $3
B. ($3)
C. ($45)
D. $45

12. Broxterman Corporation has provided the following information concerning a capital budgeting project:

The company uses straight-line depreciation on all equipment. How much is the total cash flow net of income taxes in year 3?

A. $89,000
B. $39,000
C. $56,500
D. $60,000

13. Bevans Corporation is considering a capital budgeting project that would require an initial investment of $190,000. The investment would generate annual cash inflows of $58,000 for the life of the project, which is 4 years. The company's discount rate is 7%. What is the net present value of the project closest to?

A. $190,000
B. $196,446
C. $42,000
D. $6,446

14. (Ignore income taxes in this problem.) Frick Road Paving Corporation is considering an investment in a curb forming machine. The machine will cost $180,000, will last 10 years, and will have a $30,000 salvage value at the end of 10 years. The machine is expected to generate net cash inflows of $40,000 per year in each of the 10 years. Frick's discount rate is 10%. Which is the net present value of the proposed investment closest to?

A. $77,380
B. $245,800
C. $65,800
D. $250,000

15. (Ignore income taxes in this problem.) Tangen Corporation is considering the purchase of a machine that would cost $380,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $80,000. By reducing labor and other operating costs, the machine would provide annual cost savings of $104,000. The company requires a minimum pretax return of 14% on all investment projects. What is the net present value of the proposed project closest to?

A. $60,936
B. $133,753
C. $104,456
D. $24,456

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

A. 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.
B. A market price per common share that is greater than book value per common share is an indication of an overvalued stock.
C. Market price per common share usually approximates book value per common share.
D. Book value per common share is the amount that would be paid to stockholders if the company were sold to another company.

17. Mcrae Corporation's total current assets are $380,000, its noncurrent assets are $500,000, its total current liabilities are $340,000, its long-term liabilities are $250,000, and its stockholders' equity is $290,000. How much is the working capital?

A. $380,000
B. $290,000
C. $250,000
D. $40,000

18. Valdovinos Corporation has provided the following data:

What percentage is the company's net profit margin percentage closest to?

A. 2.0%
B. 38.3%
C. 3.5%
D. 1.3%

19. Dul Corporation has provided the following data concerning an investment project that it is considering:

The working capital would be released for use elsewhere at the end of the project in 3 years. The company's discount rate is 7%. What is the net present value of the project closest to?

A. $54,352
B. $10,000
C. $(61,872)
D. $(9,648)

20. (Ignore income taxes in this problem.) Riveros, Inc. is considering the purchase of a machine that would cost $120,000 and would last for 8 years. At the end of 8 years, the machine would have a salvage value of $29,000. The machine would reduce labor and other costs by $25,000 per year. Additional working capital of $9,000 would be needed immediately. All of this working capital would be recovered at the end of the life of the machine. The company requires a minimum pretax return of 18% on all investment projects. What is the net present value of the proposed project closest to?

A. $(16,942)
B. $(63,683)
C. $(18,050)
D. $(10,336)