Milton Company has
total current assets of $63,000, including inventory of $19,000, and current
liabilities of $39,000. The company's current ratio is:
Multiple Choice
0.62.
2.10.
1.62.
1.13.
The
Juarez Corporation incurred the following transactions during its first year of
operations. (Assume all transactions involve cash).
1. 1) Acquired $2,600 of capital from the owners.
2. 2) Purchased $460 of direct raw materials.
3. 3) Used $370 of these direct raw materials in the production
process.
4. 4) Paid production workers $560 cash.
5. 5) Paid $360 for manufacturing overhead (applied and actual
overhead are the same).
6. 6) Started and completed 300 units of inventory.
7. 7) Sold 210 units at a price of $6 each.
8. 8) Paid $200 for selling and administrative expenses.
The
amount of cost of goods manufactured would be:
Multiple Choice
Burke
Company produced 8,600 units of inventory and sold 6,600 of them. The company
incurred the following production costs:
Variable
manufacturing cost: $6.30 per unit
Fixed
manufacturing overhead cost: $34,830
Assuming
the company sells its product at a price of $22 per unit, and incurred $11,400
in selling and administrative costs, what is the amount of net income under
absorption costing?
Multiple Choice
Outdoor Living Company has just received a special order for 500
hammocks. Outdoor Living has sufficient idle capacity to accept the order.
Accepting the order will increase Outdoor Living's variable manufacturing
costs. Variable selling and administrative costs would be unaffected. What is
the minimum price that Outdoor Living should accept for the special order?
Multiple Choice
Which of the following
statements is incorrect?
Multiple Choice
Sheddon Industries produces two products. The products'
identified costs are as follows:
|
|
Product A
|
Product B
|
||||||||
|
Direct materials
|
|
$
|
26,000
|
|
|
|
$
|
21,000
|
|
|
|
Direct labor
|
|
|
18,000
|
|
|
|
|
30,000
|
|
|
|
|
||||||||||
The company's overhead costs of $60,000 are allocated based on
labor cost. Assume 10,000 units of product A and 11,000 units of Product B are
produced. What amount of production costs would be assigned to Product A? (Do
not round intermediate calculations.)
Multiple
Choice
$51,000
$66,500
$111,000
None of the answers are correct.
Starwood
Corporation has current assets of $390,000, total current liabilities of
$940,000, net credit sales of $1,490,000, beginning accounts receivable of
$84,000, and ending accounts receivable of $88,000. What is Starwood's accounts
receivable turnover?
Multiple Choice
The
Winchester Company estimates that its overhead costs will amount to $452,400
and the company’s manufacturing employees will work 87,000 direct labor hours
during the current year. If actual overhead costs for the year amounted to
$494,000 and actual labor hours amounted to 92,000, then overhead would be:
Multiple Choice
Shia
Company makes a product that is expected to require 5 hours of labor per unit
of product. The standard cost of labor is $5.90. Shia actually used 5.10 hours
of labor per unit of product. The actual cost of labor was $6.00 per hour. Shia
made 1,500 units of product during the period. Based on this information alone,
the labor price variance is:
Multiple Choice
Ting
Company started the accounting period with the following beginning balances:
Raw Materials Inventory, $38,000; Work in Process Inventory, $86,000; and Finished Goods Inventory, $16,000. During the accounting period, the company purchased $56,000 of raw materials and ended the period with $12,000 in raw material inventory. Direct labor costs for the period were $116,000 and $32,000 of manufacturing overhead costs were allocated to work in process. There was no over- or underapplied overhead. Ending work in process was $78,000 and ending finished goods was $31,000. Goods were sold during the period for $346,000. The amount of cost of goods manufactured (i.e., amount transferred from work in process to finished goods) would be:
Raw Materials Inventory, $38,000; Work in Process Inventory, $86,000; and Finished Goods Inventory, $16,000. During the accounting period, the company purchased $56,000 of raw materials and ended the period with $12,000 in raw material inventory. Direct labor costs for the period were $116,000 and $32,000 of manufacturing overhead costs were allocated to work in process. There was no over- or underapplied overhead. Ending work in process was $78,000 and ending finished goods was $31,000. Goods were sold during the period for $346,000. The amount of cost of goods manufactured (i.e., amount transferred from work in process to finished goods) would be:
Multiple Choice
The
following income statements are provided for Li Company's last two years of
operation:
|
|
Year 1
|
|
Year 2
|
||||
|
Number of units produced and sold
|
|
3,600
|
|
|
|
3,200
|
|
|
Sales revenue
|
$
|
57,600
|
|
|
$
|
51,200
|
|
|
Cost of goods sold
|
|
43,000
|
|
|
|
39,000
|
|
|
Gross margin
|
|
14,600
|
|
|
|
12,200
|
|
|
General, selling, and administrative expenses
|
|
7,420
|
|
|
|
6,940
|
|
|
Net income
|
$
|
7,180
|
|
|
$
|
5,260
|
|
|
|
|||||||
Assuming that cost behavior did not change over the two-year period, what is the company's annual fixed general, selling, and administrative cost?
Multiple
Choice
$3,100
$3,600
$1,050
$1,550
The
cost of direct materials purchased on account is expensed at the time the:
Multiple Choice
Consider
the following cost-volume-profit graph:
The
line designated by the letter (A) represents which of the following?
Multiple Choice
Select the incorrect statement
regarding the contribution margin income statement.
Multiple Choice
As of December 31, Year 1,
Gant Corporation had a current ratio of 1.29, quick ratio of 1.05, and working
capital of $18,000. The company uses a perpetual inventory system and sells
merchandise for more than it cost. On January 1, Year 2, Gant sold inventory on
account for $6,000. Which of the following statements is incorrect?
Multiple Choice
The following beginning and ending balances were drawn from the
records of Grimes Company:
|
|
Beginning
|
|
Ending
|
|
||||
|
Equipment
|
|
$
|
2,500
|
|
|
$
|
3,300
|
|
|
Accumulated
Depreciation
|
|
$
|
2,900
|
|
|
$
|
1,500
|
|
|
|
||||||||
If Grimes Company sold equipment that had an original cost of $1,700 and accumulated depreciation of $1,400 for $2,450, how much did Grimes pay for new equipment?
Multiple
Choice
$2,500
$2,455
$4,950
$2,400
Rose Corporation sells backpacks. Variable costs for this
product are $34 per unit, and the sales price per unit is $44 per unit. Total
fixed costs amount to $113,000. How many backpacks does Rose need to sell to
achieve a desired profit of $42,000?
Multiple Choice
Financial statement analysis involves forms of comparison
including:
Multiple Choice
What
are the two methods used to prepare the statement of cash flows?
Multiple Choice
On
January 1, Steigel Company had a balance of $815,000 in its Land account.
During the year, Steigel sold land that had cost $278,000 for $459,000 cash.
The balance in the Land account was $1,075,000 on December 31. What is the net
cash outflow from investing activities?
Multiple Choice
Generro
Company is considering the purchase of equipment that would cost $39,000 and
offer annual cash inflows of $10,800 over its useful life of 5 years. Assuming
a desired rate of return of 10%, is the project acceptable? (PV of $1 and PVA of $1) (Use appropriate factor(s) from
the tables provided.)
Multiple Choice
All
of the following factors should influence the decision to investigate a
variance except:
Multiple Choice
An
investment that costs $32,500 will produce annual cash flows of $10,850 for a
period of 4 years. Given a desired rate of return of 9%, what will the
investment generate? (PV of $1 and PVA of $1) (Use appropriate factor(s) from
the tables provided. Do not round your intermediate calculations. Round
your answer to the nearest whole dollar.)
Multiple Choice
Jackson
Company estimated that its manufacturing employees would work 88,000 direct
labor hours during the current year. During the year, its manufacturing
employees actually worked 71,000 direct labor hours. Actual manufacturing
overhead costs amounted to $352,000. Jackson applies overhead cost on the basis
of direct labor hours. The manufacturing overhead account was overapplied by
$17,200 during the current year. Based on this information the predetermined
overhead rate was:
Multiple Choice
Larry's Lawn Care incurs significant gasoline costs. This cost
would be classified as a variable cost if the total gasoline cost:
Multiple Choice
Which of the following does not represent
an advantage of the unadjusted rate of return over the payback method for
evaluating capital projects?
Multiple Choice
Herald
Company paid $2,800 cash for production supplies. The recognition of this event
will:
Multiple Choice
Which of the following items is qualitative?
Multiple Choice
The accounting records for Grant Manufacturing Company included
the following cost information relating to its first year of operations:
|
|
|
|
|
|
Direct materials
|
$
|
22,000
|
|
|
Direct labor
|
$
|
56,000
|
|
|
Fixed manufacturing overhead
|
$
|
34,000
|
|
|
Variable
manufacturing overhead
|
$
|
26,000
|
|
|
|
|||
Assume the company produced 10,000 units of inventory and sold 7,600 of these units during the year for $133,760. Under variable costing, what is the contribution margin for the year? (Ignore selling and administrative expenses.)
Multiple
Choice
$2,000.
$40,000.
None of these answers are correct.
$58,720.
If a company experiences an increase in rent expense, the total
cost line on the cost-volume-profit graph will:
Multiple Choice
The study of an individual financial statement item over several
accounting periods is called:
Multiple Choice
Warren
Company applies overhead based on direct labor cost. Warren Company estimated
that it would incur $92,000 in manufacturing overhead costs and $61,000 of
direct labor costs during the current year. Actual manufacturing overhead cost
totaled $77,000 and actual direct labor costs totaled $57,000 during the
current year. If total manufacturing costs were $162,000, what amount of direct
materials was used during the year?
Multiple Choice
The following balance sheet information is provided for Patton
Company:
|
Assets
|
Year 2
|
|
Year 1
|
||||
|
Cash
|
$
|
3,200
|
|
|
$
|
2,800
|
|
|
Accounts receivable
|
|
12,700
|
|
|
|
14,700
|
|
|
Inventory
|
$
|
28,500
|
|
|
$
|
35,500
|
|
|
|
|||||||
Assuming Year 2 cost of goods sold is $372,000, what is the company's average days to sell inventory? (Use 365 days in a year. Do not round your intermediate calculations.)
Multiple
Choice
27.96 days
31.40
days
34.83
days
11.63 days
Travis
Company had no beginning work in process or finished goods. Its total
manufacturing costs for the year were $878,000. If cost of goods manufactured
was $676,000 and cost of goods sold was $518,000, the amount of ending work in
process would have been:
Multiple Choice
Which of the following is not a possible
alternate term for costs that can be eliminated by taking a specified course of
action?
Multiple Choice
Farris Company reported the following information for its two
products:
|
|
Product X
|
|
Product Y
|
||||
|
Selling price per unit
|
$
|
50
|
|
|
$
|
60
|
|
|
Variable cost per
unit
|
|
30
|
|
|
|
30
|
|
|
|
|||||||
Due to labor constraints, demand for each of the products is
greater than its supply. Product X requires one hour of labor to produce and
product Y requires three hours of labor to produce. Which of the following
statements is true?
Multiple
Choice
Product
Y should be produced and sold because it provided a higher contribution margin
per unit than Product X.
Product
X should be produced and sold because it provides a higher contribution margin
per labor hour than Product Y.
Product
Y should be produced and sold because it provides more revenue than Product X.
Product X should be produced and sold because it has a lower
cost than Product Y.
The
income statement of Collins Co. reported total sales revenue of $230,000 during
the current year. Assume that all sales are credit sales. The company's
comparative balance sheets reported a balance in accounts receivable of $35,000
at the beginning of the year and $50,000 at the end of the year. The cash
inflow from customers during the current year equals:
Multiple Choice
The process of dividing a total cost into parts and assigning it
to cost objects is known as:
Multiple Choice
The
standard amount of materials required to make one unit of Product Q is 9
pounds. Tusa's static budget showed a planned production of 5,600 units. During
the period, the company actually produced 5,700 units of product. The actual
amount of materials used averaged 8.9 pounds per unit. The standard price of
material is $1 per pound. Based on this information, the materials usage
variance was:
Multiple Choice
Which
manager is usually held responsible for labor price variances?
Multiple Choice
When
using the indirect method to complete the cash flows from operating activities
section, what is the proper treatment of depreciation expense?
Multiple Choice
The following partial balance sheet is provided for Groome
Company:
|
Liabilities and Stockholders' Equity
|
|
|
|
|
Accounts payable
|
$
|
9,500
|
|
|
Salaries payable
|
|
13,400
|
|
|
Bonds payable (due in ten years)
|
|
20,000
|
|
|
Common stock, no par
|
|
30,500
|
|
|
Retained earnings
|
|
54,500
|
|
|
Total liabilities and
stockholders' equity
|
$
|
127,900
|
|
|
|
|||
What is the company's debt to assets ratio? (Rounded to nearest whole percent.)
Multiple
Choice
16%
34%
49%
Cannot be determined with the information given.
Mountain Gear has been using the same machines to make its
name-brand clothing for the last five years. A cost efficiency consultant has
suggested that production costs may be reduced by purchasing more
technologically advanced machinery. The old machines cost the company $330,000.
The old machines presently have a book value of $133,000 and a market value of
$25,000. They are expected to have a five-year remaining life and zero salvage
value. The new machines would cost the company $230,000 and have operating
expenses of $19,000 a year. The new machines are expected to have a five-year
useful life and no salvage value. The operating expenses associated with the
old machines are $43,000 a year. The new machines are expected to increase
quality, justifying a price increase and thereby increasing sales revenue by
$23,000 a year. Select the true statement.
Multiple Choice
Which
manager is normally held responsible for fixed cost volume variances?
Multiple Choice
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
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
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
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:
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
|
$12,000
|
$11,000
|
$5,000
|
$11,000
|
$5,000
|
|
|
||||
Using the averaging method, the payback period for the
investment in the oven would be:
Multiple
Choice
2.50
years.
5.00
years.
2.00
years.
0.50 years.
The Bernard Company provided the following information from its
financial records:
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
310,000
|
|
Total stockholders' equity
|
$
|
910,000
|
|
|
Common dividends
|
$
|
21,000
|
|
Common shares
outstanding 12/31
|
|
131,000
|
|
|
Preferred rights
|
$
|
260,000
|
|
|
|
|
|
|
|
|||||||
What is the company's book value per share?
Multiple
Choice
$4.96
$6.95
$2.37
$2.21
Alex
brought his lunch today but now a coworker has asked him to go to the deli
across the street.
Select
the correct statement
from the following.
Multiple Choice
A chair manufacturer makes custom chairs using hand tools, wood,
glue, and varnish. Which of the following statements is true?
Multiple Choice
Bates
Company recognized $16,000 of estimated manufacturing overhead costs at the end
of the month. As a result of this transaction the:
Multiple Choice
Phibbs Company prepared the following data for the year.
|
|
|
|
|
|
Outflow to purchase treasury stock
|
$
|
68,000
|
|
|
Inflow from sale of
machinery
|
|
26,500
|
|
|
Inflow from sale of marketable securities
|
|
8,500
|
|
|
Outflow to purchase
building
|
|
97,000
|
|
|
Outflow to purchase land
|
|
22,000
|
|
|
Outflow to pay
dividends
|
|
17,000
|
|
|
Outflow to pay interest
|
|
47,000
|
|
|
|
|||
What is the net cash flow from investing activities?
Multiple
Choice
$84,000 outflow
$55,500 outflow
$174,500 outflow
$209,500 outflow
The following balance sheet information is provided for Apex
Company for Year 2:
|
|
|
|
|
|
Assets
|
|
|
|
|
Cash
|
$
|
5,600
|
|
|
Accounts receivable
|
|
11,750
|
|
|
Inventory
|
|
14,800
|
|
|
Prepaid expenses
|
|
1,600
|
|
|
Plant and equipment,
net of depreciation
|
|
19,500
|
|
|
Land
|
|
13,400
|
|
|
Total assets
|
$
|
66,650
|
|
|
Liabilities and stockholders' equity
|
|
|
|
|
Accounts payable
|
$
|
2,790
|
|
|
Salaries payable
|
|
8,230
|
|
|
Bonds payable (due in
ten years)
|
|
12,000
|
|
|
Common stock, no par
|
|
16,500
|
|
|
Retained earnings
|
|
27,130
|
|
|
Total liabilities and stockholders' equity
|
$
|
66,650
|
|
|
|
|||
What is the company's working capital?
Multiple
Choice
$22,730
$22,200
$5,100
$19,600
When
would a sales variance be listed as favorable?
Multiple Choice
All
of the following costs are accumulated in the Work in Process Inventory account except:
Multiple Choice
Arch Associates reports the following comparative balance sheets
and income statement information.
|
Arch
Associates
|
|
|||||||||
|
Comparative Balance Sheets
|
|
|||||||||
|
|
12/31/Year 1
|
|
12/31/Year 2
|
|
||||||
|
Cash
|
|
$
|
13,200
|
|
|
|
$
|
23,200
|
|
|
|
Accounts receivable
|
|
|
5,200
|
|
|
|
|
9,200
|
|
|
|
Prepaid insurance
|
|
|
11,200
|
|
|
|
|
9,200
|
|
|
|
Inventory
|
|
|
7,200
|
|
|
|
|
3,200
|
|
|
|
Property, plant and equipment
|
|
|
13,200
|
|
|
|
|
11,200
|
|
|
|
Total assets
|
|
$
|
50,000
|
|
|
|
$
|
56,000
|
|
|
|
Accounts payable
|
|
$
|
9,200
|
|
|
|
$
|
13,200
|
|
|
|
Salaries payable
|
|
|
11,200
|
|
|
|
|
5,200
|
|
|
|
Long term notes payable
|
|
|
10,400
|
|
|
|
|
8,400
|
|
|
|
Stockholders' equity
|
|
|
19,200
|
|
|
|
|
29,200
|
|
|
|
Total liabilities and equity
|
|
$
|
50,000
|
|
|
|
$
|
56,000
|
|
|
|
|
||||||||||
|
Income
Statement
|
|||
|
Year Ended 12/31/Year 2
|
|||
|
Revenue
|
$
|
94,000
|
|
|
Cost of goods sold
|
|
46,000
|
|
|
Gross margin
|
|
48,000
|
|
|
Operating expense
|
|
26,000
|
|
|
Net income
|
$
|
22,000
|
|
|
|
|||
The amount of cash collected from customers during Year 2 was:
Multiple
Choice
$90,000.
$94,000.
$86,000.
$98,000.
Wu
Company incurred $48,600 of fixed cost and $59,400 of variable cost when 2,200
units of product were made and sold.
If
the company's volume doubles, the total cost per unit will:
Multiple Choice
Financial reporting standards require that joint costs:
Multiple Choice
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