1. The work-in-process inventory account of a manufacturingcompany shows a balance of $3,000 at the end of anaccounting period. The job-cost sheets of the two incompletejobs show charges of $500 and $300 for directmaterials, and charges of $400 and $600 for direct labor.From this information, it appears that the company isusing a predetermined overhead rate as a percentage ofdirect labor costs. What percentage is the rate?2. The break-even point in dollar sales for Rice Company is$480,000 and the company’s contribution margin ratiois 40 percent. If Rice Company desires a profit of$84,000, how much would sales have to total?3. Williams Company’s direct labor cost is 25 percent of itsconversion cost. If the manufacturing overhead for thelast period was $45,000 and the direct material cost was$25,000, how much is the direct labor cost?4. Grading Company`s cash and cash equivalents consist ofcash and marketable securities. Last year the company`scash account decreased by $16,000 and its marketablesecurities account increased by $22,000. Cash providedby operating activities was $24,000. Net cash used forfinancing activities was $20,000. Based on this information,was the net cash flow from investing activities onthe statement of cash flows a net increase or decrease?By how much?5. Gladstone Footwear Corporation`s flexible budget costformula for supplies, a variable cost, is $2.82 per unit ofoutput. The company`s flexible budget performance reportfor last month showed an $8,140 unfavorable spendingvariance for supplies. During that month, 21,250 unitswere produced. Budgeted activity for the month hadbeen 20,900 units. What is the actual cost per unit forindirect materials?
6. Lyons Company consists of two divisions, A and B. LyonsCompany reported a contribution margin of $60,000 forDivision A, and had a contribution margin ratio of 30percent in Division B, when sales in Division B were$240,000. Net operating income for the company was$22,000 and traceable fixed expenses were $45,000. Howmuch were Lyons Company`s common fixed expenses?7. Atlantic Company produces a single product. For the mostrecent year, the company`s net operating income computedby the absorption costing method was $7,800, and its netoperating income computed by the variable costing methodwas $10,500. The company`s unit product cost was $15under variable costing and $24 under absorption costing.If the ending inventory consisted of 1,460 units, howmany units must have been in the beginning inventory8. Black Company uses the weighted-average method in itsprocess costing system. The company`s ending work in processinventory consists of 6,000 units, 75 percentComplete with respect to materials and 50 percent completewith respect to labor and overhead. If the totaldollar value of the inventory is $80,000 and the cost perequivalent unit for labor and overhead is $6.00, what isthe cost per equivalent unit for materials?9. At Overland Company, maintenance cost is exclusively avariable cost that varies directly with machine-hours. Theperformance report for July showed that actual maintenancecosts totaled $11,315 and that the associated ratevariance was $146 unfavorable. If 7,300 machine-hourswere actually worked during July, what is the budgetedmaintenance cost per machine-hour?10. The cost of goods sold in a retail store totaled $650,000.Fixed selling and administrative expenses totaled $115,000and variable selling and administrative expenses were$420,000. If the store`s contribution margin totaled$590,000, how much were the sales?11. Denny Corporation is considering replacing a technologicallyobsolete machine with a new state-of-the-artnumerically controlled machine. The new machine wouldcost $600,000 and would have a 10-year useful life.Unfortunately, the new machine would have no salvagevalue. The new machine would cost $20,000 per year tooperate and maintain, but would save $125,000 per yearin labor and other costs. The old machine can be soldnow for scrap for $50,000. What percentage is the simplerate of return on the new machine rounded to the nearesttenth of a percent? (Ignore income taxes in this problem.12. Lounsberry Inc. regularly uses material O55P and currentlyhas in stock 375 liters of the material, for which it paid$2,700 several weeks ago. If this were to be sold as is onthe open market as surplus material, it would fetch $6.35per liter. New stocks of the material can be purchasedon the open market for $7.20 per liter, but it must bepurchased in lots of 1,000 liters. You`ve been asked todetermine the relevant cost of 900 liters of the materialto be used in a job for a customer. What is the relevantcost of the 900 liters of material O55P?Top of Form
13. Harwichport Company has a current ratio of 3.0 and
an acid-test ratio of 2.8. Current assets equal $210,000,
of which $5,000 consists of prepaid expenses. The
remainder of current assets consists of cash, accounts
receivable, marketable securities, and inventory. What
is the amount of Harwichport Company`s inventory?
14. Tolla Company is estimating the following sales for the
first six months of next year:
Sales at Tolla are normally collected as 70 percent in the
month of sale, 25 percent in the month following the sale,
and the remaining 5 percent being uncollectible. Also, customers
paying in the month of sale are given a 2 percent
discount. Based on this information, how much cash
should Tolla expect to collect during the month of April?
15. Trauscht Corporation has provided the following data
from its activity-based costing system:
The company makes 360 units of product P23F a year,
requiring a total of 725 machine-hours, 85 orders, and 45
inspection-hours per year. The product`s direct materials
cost is $42.30 per unit and its direct labor cost is $14.55
per unit. The product sells for $132.10 per unit. According
to the activity-based costing system, what is the product
margin for product P23F?
16. Williams Company`s direct labor cost is 30 percent of its
conversion cost. If the manufacturing overhead for the
last period was $59,500 and the direct materials cost
was $37,000, what is the direct labor cost?
17. In a recent period, 13,000 units were produced, and there
was a favorable labor efficiency variance of $23,000.
If 40,000 labor-hours were worked and the standard
wage rate was $13 per labor-hour, what would be the
standard hours allowed per unit of output?
18. The balance in White Company`s work-in-process inventory
account was $15,000 on August 1 and $18,000 on
August 31. The company incurred $30,000 in direct labor
cost during August and requisitioned $25,000 in raw
materials (all direct material). If the sum of the debits to
the manufacturing overhead account total $28,000 for the
month, and if the sum of the credits totaled $30,000, then
was Finished Goods debited or credited? By how much?
19. A company has provided the following data:
Sales 4,000 units
Sales price $80 per unit
Variable cost $50 per unit
Fixed cost $30,000
If the dollar contribution margin per unit is increased
by 10 percent, total fixed cost is decreased by 15 percent,
and all other factors remain the same, will net operating
income increase or decrease? By how much?
20. For the current year, Paxman Company incurred
$175,000 in actual manufacturing overhead cost. The
manufacturing overhead account showed that overhead
was overapplied in the amount of $9,000 for the year.
If the predetermined overhead rate was $8.00 per
direct labor-hour, how many hours were worked
during the year?