Mr. J's Bagels invested in a new oven for $22,000. The oven reduced the amount of time for baking which increased production and sales for five years by the following amounts of cash inflows:

Which manager is normally held responsible for fixed cost volume variances?

Multiple Choice

Plant manager


Purchasing agent


Upper-level marketing managers Correct

Production supervisor

Answer
Upper-level marketing managers Correct

Joint products A and B emerge from common processing that costs $118,000 and yields 4,000 units of Product A and 3,000 units of Product B. Product A can be sold for $300 per unit. Product B can be sold for $100 per unit. How much of the joint cost will be assigned to Product A if joint costs are allocated on the basis of relative sales values? (Do not round intermediate calculations.)

Multiple Choice
$89,400
$84,400
$91,900
$94,400 Correct

Answer
$94,400 Correct
Explanation
Allocation rate = Total cost to be allocated ÷ Cost driver (allocation base)
Allocation rate = $118,000 in joint costs ÷ [(4,000 units × $300 per unit) + (3,000 units × $100 per unit)] = 7.867%
Allocation per cost object = Allocation rate × Weight of the cost driver for that cost object
Allocation of joint costs to Product A= 7.867% × (4,000 units × $300 per unit) = $94,400

The income statement for Year 2 of Winter Co. reported wages expense of $70,000. At December 31, Year 1, the balance sheet showed a balance in wages payable of $4,000. At December 31, Year 2, the balance sheet showed a balance in wages payable of $14,000. What amount of cash was paid for wages during the year?

Multiple Choice

$66,000


$60,000 Correct

$80,000


$74,000
Answer
$60,000 Correct

Explanation
Beginning balance of wages payable + Expenses incurred on account − Cash outflow for expenses = Ending balance of wages payable
$4,000 + $70,000 − Cash outflow for expenses = $14,000
Cash outflow for expenses = $4,000 + $70,000 − $14,000 = $60,000

In preparing the statement of cash flows by the indirect method, which of the following is an incorrect statement of one of the general rules to convert net income to a cash-basis equivalent?

Multiple Choice

Increases in current liabilities are subtracted from net income. Correct

Increases in current assets are subtracted from net income.


Noncash revenue and gains are subtracted from net income.


Decreases in current assets are added to net income.
Answer
Increases in current liabilities are subtracted from net income. Correct
Explanation
Net cash flow from operating activities = Net income +/− Adjustments to reconcile net income to net cash flow from operating activities
Net cash flow from operating activities = Net income − Increase in current assets + Decrease in current assets + Increase in current liabilities − Decrease in current liabilities + Depreciation expense − Gain on sale of equipment + Loss on sale of equipment

Mr. J's Bagels invested in a new oven for $22,000. The oven reduced the amount of time for baking which increased production and sales for five years by the following amounts of cash inflows:

Using the averaging method, the payback period for the investment in the oven would be:
Multiple Choice
2.50 years.Correct
5.00 years.
2.00 years.
0.50 years.
Answer
2.50 years.Correct
Explanation
Payback period = Initial investment ÷ Average annual cash inflow
Payback period = $22,000 ÷ [($12,000 + $11,000 + $5,000 + $11,000 + $5,000) ÷ 5] = $22,000 ÷ $8,800 = 2.50


The Bernard Company provided the following information from its financial records:

What is the company's book value per share?

Multiple Choice

$4.96 Correct

$6.95


$2.37


$2.21
Answer
$4.96 Correct

Explanation
Book value per common share = (Stockholders’ equity − Preferred rights) ÷ Outstanding common shares
Book value per common share = ($910,000 − $260,000) ÷ 131,000 = $650,000 ÷ 131,000 = $4.96 per share