1. (Points: 1) With respect to a corporation, select the statement that is correct. a. Its organization requires an approved charter which is governed by state law. b. Ownership rights to the corporation are transferable. c. A corporation is a separate legal entity from its owners. d. Stockholders have limited liability. e. All of the above are correct. Save Answer 2. (Points: 1) Which of the following represents the shares currently in the hands of investors? a. Authorized shares b. Issued shares c. Outstanding shares d. Unissued shares e. Treasury shares Save Answer 3. (Points: 1) The par value of common stock is the a. average market price of the stock during the period in which it is sold. b. ceiling (maximum) amount above which the stock may not be sold initially. c. floor (minimum) amount below which the stock may not be sold initially. d. selling price of the stock at the date it was issued by the corporation. e. same as the market value for the stock on the date of issue. Save Answer 4. (Points: 1) Vaughan Company has one class of capital stock issued. It is a. common stock. b. preferred stock, voting. c. preferred stock, noncumulative. d. common stock, nonvoting. e. None of the above is correct. Save Answer 5. (Points: 1) If Lynch Corporation sells and issues 100 shares of its $10 par value common stock at $11 per share, the entry to record the sale will not include a a. Debit to Cash of $1,100. b. Credit to Contributed capital in excess of par of $100. c. Credit to Common stock of $1,000. d. Credit to Retained earnings of $100. e. All of the above would be included. Save Answer 6. (Points: 1) The conversion feature on convertible preferred stock enables the stockholder to convert it to a. convertible bonds. b. cash. c. common stock. d. products of the company. e. dividends in arrears. Save Answer 7. (Points: 1) Choose the correct definition for par value from the following: a. The amount that a corporation must pay when it exercises its right to convert shares of stock. b. The equity of one share of outstanding stock in the issuing corporation's net assets as recorded in the corporation's accounts. c. An arbitrary value placed on a share of stock at the time the stock is authorized in the corporate charter. d. The costs of bringing a corporation into existence, such as legal fees, promotor's fees, and amounts paid to the state to secure a charter. Save Answer 8. (Points: 1) Guest Corporation issued (sold) 1,000 shares of its no par common stock for $110 per share. The bylaws established a stated value of $100 per share. The transaction is recorded as an increase in contributed capital of a. $ 100,000. b. $ 110,000. c. $1,000,000. d. $1,100,000. e. None of the above is correct. Save Answer 9. (Points: 1) Which of the following statements is true? a. An initial public offering (IPO) occurs when the company first offers their stock for sale to the public. b. A seasoned new issue is the term used for any additional sales of new stock to the public after the IPO. c. An underwriter, usually an investment banker, advises the corporation on matters concerning the sale of shares of stock and helps to market those shares for a fee. d. A and B are true. e. All of the above are true. Save Answer 10. (Points: 1) Shares of stock eligible for dividends are a. the number of shares of authorized. b. the number of shares issued. c. the number of shares outstanding. d. the number of treasury shares. e. none of the above. Save Answer 11. (Points: 1) The declaration and payment of a cash dividend a. reduces retained earnings and increases liabilities by the amount of the dividend. b. reduces retained earnings and increases contributed capital by the same amount. c. reduces assets and increases liabilities each by the amount of the dividend. d. reduces assets and retained earnings each by the amount of the dividend. e. None of the above is correct. Save Answer 12. (Points: 1) Retained earnings a. is an asset. b. has a debit balance for a successful corporation. c. represents the future dividend liability of the company. d. represents the income that has been earned by the company, less any dividends declared since the first day of operations. e. is presented on the Statement of Cash Flows. Save Answer 13. (Points: 1) At the end of 20C, Allen Corporation reported a retained earnings credit balance of $50,000. During 20D, Allen reported the following amounts: Cash dividends declared and paid $15,000, net income of $35,000, and a $5,000 prior period adjustment (debit). The 20D ending balance of total retained earnings was a. $75,000. b. $70,000. c. $65,000. d. $60,000. e. None of the above is correct. Save Answer 14. (Points: 1) Which of the following accounts would appear in the general ledger of a partnership? a. Retained earnings account. b. Dividends paid account. c. Common stock accounts. d. Drawings accounts. e. None of the above. Save Answer 15. (Points: 1) The statement of cash flows reports directly on the a. financial position of the business. b. accrual basis in accordance with GAAP. c. causes of the inflows and outflows of cash. d. financial operating performance of the business. e. None of the above is correct. Save Answer 16. (Points: 1) Which of the following transactions would not create a cash flow? a. The company purchased some of its own stock from a stockholder. b. Amortization of patent for the period. c. Payment of a cash dividend. d. Sale of equipment at book value (i.e. no gain or loss). e. None of the above is correct. Save Answer 17. (Points: 1) Which of the following transactions is not a direct source of cash? a. Disposal of inventory for cash. b. Borrowing cash. c. Sale and issuance of capital stock for cash. d. Sale of services for cash. e. All of the above are direct sources of cash. Save Answer 18. (Points: 1) Which of the following transactions is not a direct use of cash? a. Acquisition of inventory for cash. b. Exchanges of bonds payable for land. c. Purchase of treasury stock with cash. d. Cash dividend paid. e. All of the above are direct uses of cash. Save Answer 19. (Points: 1) Which of the following transactions is not a source of cash? a. Cash sales of merchandise. b. Sale and issuance of capital stock for cash. c. Short-term borrowing of cash. d. Sale of operational assets for cash. e. All of the above are typical sources of cash. Save Answer 20. (Points: 1) Common stockholders have the right to a. sell their stock. b. share in any dividends distributed to common stockholders. c. have the first opportunity to purchase any additional shares of common stock issued by the corporation. d. vote at stockholders' meetings. e. All of the above are true. Save Answer 21. (Points: 1) Which of the following would not be a cash flow from investing activities? a. Purchase of long-term investments. b. Sale of a patent. c. Collection of principal of a note receivable. d. Collection of interest revenue on a long-term note. e. None of the above is correct. Save Answer 22. (Points: 1) Which of the following would not be a cash flow from financing activities? a. Issuance of common stock. b. Borrowing on a long-term note payable. c. Collection of a cash dividend. d. Repayment of principal on a long-term note payable. e. None of the above is correct. Save Answer 23. (Points: 1) Which of the following is a cash flow from operating activities? a. Purchase of merchandise for resale. b. Sale of a piece of land no longer used in operations. c. Sale of long-term investments in common stock. d. Payment of a note payable. e. None of the above is correct. Save Answer 24. (Points: 1) A cash inflow from financing activities includes a. proceeds from selling investments in equity securities of another company. b. proceeds from selling equipment. c. proceeds from issuance of bonds payable. d. receipt of interest payments. e. None of the above is correct. Save Answer 25. (Points: 1) The statement of cash flows (indirect method) reports depreciation expense as an addition to net income because depreciation a. causes an inflow of funds for the replacement of assets. b. reduces reported net income of the period but does not involve an outflow of cash for that period. c. is a direct use of cash. d. reduces reported net income and causes an inflow of cash. e. None of the above is correct. Save Answer 26. (Points: 1) When a company prepares a bond indenture, certain provisions of the bonds are included. Which of the following are not provisions specified in the indenture? a. Dates of interest payments. b. Rate of interest to be paid. c. Maturity date. d. Cash to be received at the issue date. e. All of the above are specified in the indenture. Save Answer 27. (Points: 1) Positive financial leverage occurs when a. interest payments can be deducted for income tax purposes. b. the company's after-tax return on total assets is less than the after-tax cost of borrowing. c. the return to the owners is enhanced through the use of debt financing. d. payment of resources to creditors is limited to the required interest payments while the return of the principal borrowed is not required. e. None of the above is correct. Save Answer 28. (Points: 1) Bonds payable usually are classified on the balance sheet as a. long-term liabilities. b. current liabilities. c. investments and funds. d. current assets. e. None of the above is correct. Save Answer 29. (Points: 1) The annual interest rate specified on a bond (which is based on the maturity amount of the bond) appropriately can be called the a. stated rate. b. nominal rate. c. coupon rate. d. contract rate. e. A through D are all acceptable terms. Save Answer 30. (Points: 1) Which of the following statements is correct? a. Bonds are always issued (sold) at their par value. b. Bonds issued at more than par value are said to be issued at a discount. c. Once bonds are issued, the bonds will trade in the bond market above or below par depending on changes in interest rates. d. Bondholders must hold their bonds to maturity to receive cash for their investment. e. None of the above is correct. Save Answer 31. (Points: 1) On July 1, 20A, Wilson Company issued $300,000, five-year, 9% bonds at 103. The reason Wilson issued the bonds at a premium was a. the stated rate of interest was higher than the rate being paid on investments with comparable risk. b. the stated rate of interest was the same as the rate being paid on investments with comparable risk. c. the stated rate of interest was lower than the rate being paid on investments with comparable risk. d. the bonds were callable. e. None of the above is correct. Save Answer 32. (Points: 1) Deany Company issued $100,000 bonds. The stated rate of interest was 8% and the market rate 9%. Which of the following statements is true? a. The bonds were issued at a premium. b. Annual interest expense will exceed the company's actual cash payments for interest. c. Annual interest expense will be $8,000. d. Deany Company cannot issue bonds if the market rate is higher than the stated rate. e. None of the above is correct. Save Answer 33. (Points: 1) If a bond is sold at 98, its stated rate of interest would be a. higher than the market rate. b. lower than the market rate. c. equal to the market rate. d. unrelated to the market rate. e. None of the above is correct. Save Answer 34. (Points: 1) Ratios are most useful for analysis when a. used alone. b. compared with historical ratios of the same company. c. compared with ratios for other companies in the industry. d. Both B and C are correct. e. All of the above are correct. Save Answer 35. (Points: 1) The base amount in preparing a common-size income statement is usually a. cost of goods sold. b. gross profit. c. net income. d. net sales. e. All of the above are appropriate. Save Answer 36. (Points: 1) The Able Company had net income of $47,500 and earnings per share of $3.17 during 20B. On December 31, 20B, the stock had a market price of $18.50 per share. What is Able's price/earnings ratio? a. 25.70. b. 8.11. c. 5.84. d. 0.17. e. None of the above is correct. Save Answer 37. (Points: 1) Perot Company had income before interest and taxes of $120,000. Interest expense for the period was $17,000 and income taxes amounted to $28,500. The average stockholders' equity was $680,000. What is Perot's return on equity? a. 17.65%. b. 15.15%. c. 13.46%. d. 10.96%. e. None of the above is correct. Save Answer 38. (Points: 1) A business must maintain a sufficient amount of working capital to a. meet current debts b. carry adequate inventories c. take advantage of cash discounts d. to maintain liquidity. e. All of the above are correct. Save Answer 39. (Points: 1) Crusader Company reported the following amounts in the 20A balance sheet Total assets $330,000 Total liabilities $100,000 Common stock, par value $9 (no preferred stock) $90,000 The book value of the common stock was a. $11. b. $20. c. $33. d. $22. e. None of the above is correct. Save Answer 40. (Points: 1) At the end of 20B, Storage Company reported outstanding common stock (par $20) of $300,000. Total liabilities were $440,000 and total assets were $860,000. The company had no preferred stock. The book value per share of common stock was a. $29.00. b. $13.90. c. $28.00. d. $14.00. e. None of the above is correct. Save Answer 41. (Points: 1) Bailey Corporation reported the following information for 20A Net income $10,000 Total assests $16,000 Total stockholders' equity $8,000 Morgan's debt/equity ratio was a. .33 or 33%. b. 1.25 or 125 %. c. 1.0 or 100%. d. 3.0 or 300%. e. None of the above is correct. Save Answer 42. (Points: 1) Shore Company reported income before extraordinary items of $25,000, total liabilities of $150,000, and total stockholders' equity of $100,000. The return on assets was a. 10%. b. 25%. c. 16.67%. d. Cannot be determined from the data given. e. None of the above is correct. Save Answer 43. (Points: 1) If the current (working capital) ratio is 2 to 1, the payment of a cash dividend, which was recorded as a liability on the date of declaration, will a. increase the current ratio. b. decrease the current ratio. c. have no effect on the current ratio. d. invalidate earnings per share. e. None of the above is correct. Save Answer 44. (Points: 1) The records of ZZZZ Better Corporation include the following: Average total assets $60,000 Average total liabilities $45,000 Total revenue $107,600 Total expense (including income tax) $104,000 The return on equity is (round to the nearest percent) a. 13%. b. 6%. c. 24%. d. 6%. e. None of the above is correct. Save Answer 45. (Points: 1) An important measure of the average movement of goods "on and off the shelf" of a company is the a. Profit margin. b. Price/earnings ratio. c. Inventory turnover ratio. d. Gross inventory ratio. e. None of the above is correct. Save Answer 46. (Points: 1) Book value per common share a. usually is a good indicator of the market value of the common stock. b. is a good measure of management performance. c. is usually greater than the market value per share. d. is a measure of liquidity. e. is not widely used in assessing the future dividend potential of the corporation. Save Answer 47. (Points: 1) Which of the following ratios is NOT a test of liquidity? a. Receivable turnover. b. Cash ratio. c. Current ratio. d. Quick ratio. e. All of the above are tests of liquidity. Save Answer 48. (Points: 1) Which of the following ratios is not a test of solvency? a. Debt to equity ratio. b. Owners' equity to total equity ratio. c. Creditors' equity to total equity ratio. d. Earnings per share ratio. e. All of the above are tests of solvency. Save Answer 49. (Points: 1) Which of the following ratios is not an indicator of a company's short-term financial strength? a. Price/earnings ratio. b. Receivable turnover. c. Working capital ratio. d. Quick ratio. e. All of the above are indicators of the current position. Save Answer 50. (Points: 1) Which of the following ratios usually is not considered to be a test of profitability? a. Current ratio. b. Profit margin. c. Return on assets. d. Earnings per share. e. None of the above is correct. Save Answer 1. (Points: 1) Managerial accounting: a. has its primary emphasis on the future. b. is required by regulatory bodies such as the SEC. c. focuses on the organization as a whole, rather than on the organization's segments. d. Responses a, b, and c are all correct. Save Answer 2. (Points: 1) Which of the following statements are true regarding financial and managerial accounting? I. Both are mandatory. II. Both rely on the same underlying financial data. III. Both emphasize the segments of an organization, rather than just looking at the organization as a whole. IV. Both are geared to the future, rather than to the past. a. I, II, III, and IV b. Only II, III and IV c. Only II and III d. Only II Save Answer 3. (Points: 1) Managerial accounting places considerable weight on: a. generally accepted accounting principles. b. the financial history of the entity. c. ensuring that all transactions are properly recorded. d. detailed segment reports about departments, products, and customers. Save Answer 4. (Points: 1) The benefits of a successful Just-In-Time system include all of the following except: a. funds tied up in inventories are released for use elsewhere. b. inventory buffers are increased. c. throughput time is reduced. d. defect rates are decreased. Save Answer 5. (Points: 1) A key concept of the JIT inventory system is: a. the raw materials, work in process, and finished goods inventories of manufacturing companies act as buffers so that operations can proceed smoothly even if suppliers are late with deliveries or a department is unable to operate for a brief period due to breakdowns or other reasons. b. the use of many suppliers so as to ensure rapid delivery of materials for production. c. the maintenance of a stock of raw materials so that defective materials can be replaced quickly so as to maintain a high rate of productivity. d. inventories are costly to carry and can be kept to minimum levels or eliminated completely with careful planning. Save Answer 6. (Points: 1) The just in time (JIT) concept applies to which of the following: I. The acquisition of raw materials. II. The assembly of manufactured parts in products. III. The shipment of finished products to customers. a. I. b. I, III. c. I, II, III. d. II, III. Save Answer 7. (Points: 1) The flow of goods through a JIT system is based on: a. a workstation efficiently completing its processing of a batch of units so that the units can proceed forward to the next workstation before the next workstation is ready to receive them. b. processing goods in large batch sizes rather than less economical small batches. c. maintaining a stockpile of raw materials in anticipation of materials shortages. d. producing to meet customer demand with no buildup of inventory at any point in the production process. Save Answer 8. (Points: 1) A successful JIT system is based upon which of the following concepts? a. The company must rely upon a large number of suppliers to ensure frequent deliveries of small lots. b. The company should always choose those suppliers offering the lowest prices. c. The company should avoid long-term contracts with suppliers so as to exert pressure on suppliers to make prompt and frequent deliveries. d. A small number of suppliers make frequent deliveries of specific quantities thus avoiding the buildup of large inventories of materials on hand. Save Answer 9. (Points: 1) A danger in Process Reengineering is that: a. non-value-added activities may be eliminated. b. some resources may no longer be required. c. employee morale may suffer. d. all of the above. Save Answer 10. (Points: 1) The Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management contains a policy regarding confidentiality that requires that management accountants: a. refrain from disclosing confidential information acquired in the course of their work except when authorized by management. b. refrain from disclosing confidential information acquired in the course of their work in all situations. c. refrain from disclosing confidential information acquired in the course of their work except when authorized by management, unless legally obligated to do so. d. refrain from disclosing confidential information acquired in the course of their work in all cases since the law requires them to do so. Save Answer 11. (Points: 1) The Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management states that significant ethical issues should be discussed first with an immediate superior unless the superior is involved. If satisfactory resolution cannot be achieved when the problem is initially presented, then the issues should be: a. submitted to the next higher managerial level. b. submitted to the chief executive officer of the firm. c. submitted to the audit committee, executive committee, board of directors, or owners. d. submitted to outside legal counsel. Save Answer 12. (Points: 1) The corporate controller's salary would be considered a(n): a. manufacturing cost. b. product cost. c. administrative cost. d. selling expense. Save Answer 13. (Points: 1) The cost of fire insurance for a manufacturing plant is generally considered to be a: a. product cost. b. period cost. c. variable cost. d. all of the above. Save Answer 14. (Points: 1) Each of the following would be a period cost except: a. the salary of the company president's secretary. b. the cost of a general accounting office. c. depreciation of a machine used in manufacturing. d. sales commissions. Save Answer 15. (Points: 1) For a manufacturing company, which of the following is an example of a period rather than a product cost? a. Depreciation of factory equipment. b. Wages of salespersons. c. Wages of machine operators. d. Insurance on factory equipment. Save Answer 16. (Points: 1) Which of the following would be considered a product cost for external financial reporting purposes? a. Cost of a warehouse used to store finished goods. b. Cost of guided public tours through the company's facilities. c. Cost of travel necessary to sell the manufactured product. d. Cost of sand spread on the factory floor to absorb oil from manufacturing machines. Save Answer 17. (Points: 1) Which of the following would NOT be treated as a product cost for external financial reporting purposes? a. Depreciation on a factory building. b. Salaries of factory workers. c. Indirect labor in the factory. d. Advertising expenses. Save Answer 18. (Points: 1) Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following? a. Product cost b. Manufacturing overhead c. Period cost d. Administrative cost Save Answer 19. (Points: 1) Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following? a. Product cost b. Manufacturing overhead c. Direct labor d. Period cost Save Answer 20. (Points: 1) wages of factory maintenance personnel would usually be considered to be: Indirect labor; Manufacturing overhead a. No; Yes b. Yes; No c. Yes; Yes d. No; No Save Answer 21. (Points: 1) Direct materials are a part of: Conversion cost; Manufacturing cost; Prime cost a. Yes; Yes; No b. Yes; Yes; Yes c. No; Yes; Yes d. No; No; No Save Answer 22. (Points: 1) Manufacturing overhead consists of: a. all manufacturing costs. b. all manufacturing costs, except direct materials and direct labor. c. indirect materials but not indirect labor. d. indirect labor but not indirect materials. Save Answer 23. (Points: 1) Which of the following should NOT be included as part of manufacturing overhead at a company that makes office furniture? a. sheet steel in a file cabinet made by the company. b. manufacturing equipment depreciation. c. idle time for direct labor. d. taxes on a factory building. Save Answer 24. (Points: 1) Rossiter Company failed to record a credit sale at the end of the year, although the reduction in finished goods inventories was correctly recorded when the goods were shipped to the customer. Which one of the following statements is correct? a. Accounts receivable was not affected, inventory was not affected, sales were understated, and cost of goods sold was understated. b. Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was overstated. c. Accounts receivable was not affected, inventory was understated, sales were understated, and cost of goods sold was understated. d. Accounts receivable was understated, inventory was not affected, sales were understated, and cost of goods sold was not affected. Save Answer 25. (Points: 1) If the cost of goods sold is greater than the cost of goods manufactured, then: a. work in process inventory has decreased during the period. b. finished goods inventory has increased during the period. c. total manufacturing costs must be greater than cost of goods manufactured. d. finished goods inventory has decreased during the period. Save Answer 26. (Points: 1) Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behavior patterns remain unchanged the: a. total variable cost will remain unchanged. b. fixed costs will increase in total. c. variable cost per unit will increase. d. total cost per unit will decrease. Save Answer 27. (Points: 1) Variable cost: a. increases on a per unit basis as the number of units produced increases. b. remains constant on a per unit basis as the number of units produced increases. c. remains the same in total as production increases. d. decreases on a per unit basis as the number of units produced increases. Save Answer 28. (Points: 1) Within the relevant range, the difference between variable costs and fixed costs is: a. variable costs per unit fluctuate and fixed costs per unit remain constant. b. variable costs per unit are constant and fixed costs per unit fluctuate. c. both total variable costs and total fixed costs are constant. d. both total variable costs and total fixed costs fluctuate. Save Answer 29. (Points: 1) Which of the following statements regarding fixed costs is incorrect? a. Expressing fixed costs on a per unit basis usually is the best approach for decision making. b. Fixed costs expressed on a per unit basis will react inversely with changes in activity. c. Assumptions by accountants regarding the behavior of fixed costs rest heavily on the concept of the relevant range. d. Fixed costs frequently represent long-term investments in property, plant, and equipment. Save Answer 30. (Points: 1) An opportunity cost is: a. the difference in total costs which results from selecting one alternative instead of another. b. the benefit forgone by selecting one alternative instead of another. c. a cost which may be saved by not adopting an alternative. d. a cost which may be shifted to the future with little or no effect on current operations. Save Answer 31. (Points: 1) Which of the following costs is often important in decision making, but is omitted from conventional accounting records? a. Fixed cost. b. Sunk cost. c. Opportunity cost. d. Indirect cost. Save Answer 32. (Points: 1) When a decision is made among a number of alternatives, the benefit that is lost by choosing one alternative over another is the: a. realized cost. b. opportunity cost. c. conversion cost. d. accrued cost. Save Answer 33. (Points: 1) Conversion cost consists of which of the following? a. Manufacturing overhead cost. b. Direct materials and direct labor cost. c. Direct labor cost. d. Direct labor and manufacturing overhead cost. Save Answer 34. (Points: 1) Which one of the following costs should NOT be considered an indirect cost of serving a particular customer at a Dairy Queen fast food outlet? a. the cost of the hamburger patty in the burger they ordered. b. the wages of the employee who takes the customer's order. c. the cost of heating and lighting the kitchen. d. the salary of the outlet's manager. Save Answer 35. (Points: 1) Green Company's costs for the month of August were as follows: direct materials, $27,000; direct labor, $34,000; sales salaries, $14,000; indirect labor, $10,000; indirect materials, $15,000; general corporate administrative cost, $12,000; taxes on manufacturing facility, $2,000; and rent on factory, $17,000. The beginning work in process inventory was $16,000 and the ending work in process inventory was $9,000. What was the cost of goods manufactured for the month? a. $105,000 b. $132,000 c. $138,000 d. $112,000 Save Answer 36. (Points: 1) A manufacturing company prepays its insurance coverage for a three-year period. The premium for the three years is $2,700 and is paid at the beginning of the first year. Eighty percent of the premium applies to manufacturing operations and 20% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage? Product; Period a. $2,700; $0 b. $2,160; $ 540 c. $1,440; $360 d. $720; $180 Save Answer 37. (Points: 1) Using the following data, calculate the beginning work in process inventory. Cost of goods sold: $70 Direct labor: $20 Direct materials: $15 Cost of goods manufactured: $80 Work in process ending: $10 Finished goods ending: $15 Manufacturing overhead: $30 The beginning work in process inventory is: a. $20. b. $15. c. $55. d. $25. Save Answer 38. (Points: 1) During the month of May, Bennett Manufacturing Company purchased $43,000 of raw materials. The manufacturing overhead totaled $27,000 and the total manufacturing costs were $106,000. Assuming a beginning inventory of raw materials of $8,000 and an ending inventory of raw materials of $6,000, direct labor must have totaled: a. $34,000. b. $38,000. c. $36,000. d. $45,000. Save Answer 39. (Points: 1) Using the following data for January, calculate the cost of goods manufactured: Direct materials: $38,000 Direct labor: $24,000 Manufacturing overhead: $17,000 Beginning work in process inventory: $10,000 Ending work in process inventory: $11,000 The cost of goods manufactured was: a. $89,000. b. $78,000. c. $79,000. d. $80,000. Save Answer 40. (Points: 1) During the month of June, Reardon Company incurred $17,000 of direct labor, $8,500 of manufacturing overhead and purchased $15,000 of raw materials. Between the beginning and the end of the month, the raw materials inventory increased by $2,000, the finished goods inventory increased by $1,500, and the work in process inventory decreased by $3,000. The cost of goods manufactured would be: a. $38,500. b. $40,500. c. $41,500. d. $43,500. Save Answer 41. (Points: 1) Williams Company's direct labor cost is 25% of its conversion cost. If the Manufacturing overhead cost for the last period was $45,000 and the direct materials cost was $25,000, the direct labor cost was: a. $15,000. b. $60,000. c. $33,333. d. $20,000. Save Answer 42. (Points: 1) The Lyons Company's cost of goods manufactured was $120,000 when its sales were $360,000 and its gross margin was $220,000. If the ending inventory of finished goods was $30,000, the beginning inventory of finished goods must have been: a. $20,000. b. $50,000. c. $110,000. d. $150,000. Save Answer 43. (Points: 1) The gross margin for Cushing Company for the first quarter of last year was $325,000 when sales were $700,000. The beginning inventory of finished goods was $60,000 and the ending inventory of finished goods was $85,000. The cost of goods manufactured for the first quarter would have been: a. $375,000. b. $350,000. c. $400,000. d. $385,000. Save Answer 44. (Points: 1) Last month a manufacturing company had the following operating results: Beginning finished goods inventory: $74,000 Ending finished goods inventory: $73,000 Sales: $464,000 Gross margin: $52,000 What was the cost of goods manufactured for the month? a. $413,000 b. $411,000 c. $412,000 d. $463,000 Save Answer 45. (Points: 1) The following information was provided by Grand Company for the year just ended: Beginning finished goods inventory: $130,425 Ending finished goods inventory: $125,770 Sales: $500,000 Gross margin: $100,000 The cost of goods manufactured for the year was: a. $395,345. b. $95,345. c. $104,655. d. $404,655. Save Answer 46. (Points: 1) Delta Merchandising, Inc., has provided the following information for the year just ended: Net sales: $128,500 Beginning inventory: $24,000 Purchases: $80,000 Gross margin: $38,550 The ending inventory for the company at year end was: a. $65,450. b. $24,500. c. $14,050. d. $9,950. Save Answer 47. (Points: 1) The beginning balance of the Raw Materials inventory account for May was $27,500. The ending balance for May was $28,750 and $128,900 of raw materials were used during the month. The materials purchased during the month cost: a. $131,300. b. $127,650. c. $130,150. d. $157,650. Save Answer 48. (Points: 1) Haack Inc. is a merchandising company. Last month the company's cost of goods sold was $84,000. The company's beginning merchandise inventory was $20,000 and its ending merchandise inventory was $18,000. What was the total amount of the company's merchandise purchases for the month? a. $86,000 b. $82,000 c. $84,000 d. $122,000 Save Answer 49. (Points: 1) Use the following to answer questions 49-52: The following data (in thousands of dollars) have been taken from the accounting records of Karling Corporation for the just completed year. Sales: $990 Raw materials inventory, beginning: $40 Raw materials inventory, ending: $70 Purchases of raw materials: $120 Direct labor: $200 Manufacturing overhead: $230 Administrative expenses: $150 Selling expenses: $140 Work in process inventory, beginning: $70 Work in process inventory, ending: $50 Finished goods inventory, beginning: $120 Finished goods inventory, ending: $160 The cost of the raw materials used in production during the year (in thousands of dollars) was: a. $190. b. $90. c. $150. d. $160. Save Answer 50. (Points: 1) The cost of goods manufactured (finished) for the year (in thousands of dollars) was: a. $540. b. $500. c. $570. d. $590. Save Answer 51. (Points: 1) The cost of goods sold for the year (in thousands of dollars) was: a. $700. b. $500. c. $660. d. $580. Save Answer 52. (Points: 1) The net income for the year (in thousands of dollars) was: a. $150. b. $200. c. $490. d. $250. Save Answer 53. (Points: 1) Use the following to answer questions 53-54: At a sales volume of 32,000 units, CD Company's total fixed costs are $64,000 and total variable costs are $60,000. The relevant range is 30,000 to 55,000 units. If CD Company were to sell 43,000 units, the total expected cost would be: a. $146,000. b. $166,625. c. $144,625. d. $124,000. Save Answer 54. (Points: 1) If CD Company were to sell 50,000 units, the total expected cost per unit (rounded to the nearest cent) would be: a. $3.20. b. $2.48. c. $3.88. d. $3.16. Save Answer 55. (Points: 1) Which of the following companies would be most likely to use a job-order costing system rather than a process costing system? a. fast food restaurant b. shipbuilding c. crude oil refining d. candy making Save Answer 56. (Points: 1) The computation of unit product costs involves an averaging process in: Job-order costing; Process costing a. Yes; No b. Yes; Yes c. No; Yes d. No; No Save Answer 57. (Points: 1) Work in Process is a control account supported by detailed cost data contained in: a. job cost sheets. b. the Manufacturing Overhead account. c. the Finished Goods inventory account. d. purchase requisitions. Save Answer 58. (Points: 1) In a job order cost system, the journal entry to record the application of overhead cost to jobs would include: a. a credit to the Manufacturing Overhead account. b. a credit to the Work in Process inventory account. c. a debit to Cost of Goods Sold. d. a debit to the Manufacturing Overhead account. Save Answer 59. (Points: 1) In a job-order cost system, the use of indirect materials would usually be recorded as a debit to: a. Raw Materials. b. Work in Process. c. Manufacturing Overhead. d. Finished Goods. Save Answer 60. (Points: 1) In a job order cost system, the use of direct materials previously purchased usually is recorded as a debit to: a. Work in Process inventory. b. Finished Goods inventory. c. Manufacturing Overhead. d. Raw Materials inventory. Save Answer 61. (Points: 1) In a job-order cost system, direct labor costs usually are recorded initially with a debit to: a. Manufacturing Overhead. b. Finished Goods inventory. c. Direct Labor Expense. d. Work in Process. Save Answer 62. (Points: 1) If a company applies overhead to jobs on the basis of a predetermined overhead rate, a credit balance in the Manufacturing Overhead account at the end of any period means that: a. more overhead cost has been charged to jobs than has been incurred during the period. b. more overhead cost has been incurred during the period than has been charged to jobs. c. the amount of overhead cost charged to jobs is greater than the estimated cost for the period. d. the amount of overhead cost charged to jobs is less than the estimated overhead cost for the period. Save Answer 63. (Points: 1) The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period. The job cost sheets of the two uncompleted jobs show charges of $400 and $200 for direct materials, and charges of $300 and $500 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of: a. 80%. b. 125%. c. 300%. d. 240%. Save Answer 64. (Points: 1) Freeman Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. At the beginning of the year, the company estimated manufacturing overhead would be $150,000 and direct labor hours would be 10,000. The actual figures for the year were $186,000 for manufacturing overhead and 12,000 direct labor hours. The cost records for the year will show: a. overapplied overhead of $30,000. b. underapplied overhead of $30,000. c. underapplied overhead of $6,000. d. overapplied overhead of $6,000. Save Answer 65. (Points: 1) For the current year, Paxman Company incurred $150,000 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was overapplied in the amount of $6,000 for the year. If the predetermined overhead rate was $8.00 per direct labor hour, how many hours were worked during the year? a. 19,500 hours b. 18,000 hours c. 18,750 hours d. 17,750 hours Save Answer 66. (Points: 1) Carlo Company uses a predetermined overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company estimated manufacturing overhead at $255,000 for the year and direct labor-hours at 100,000 hours. Actual manufacturing overhead costs incurred during the year totaled $270,000. Actual direct labor hours were 105,000. What was the overapplied or underapplied overhead for the year? a. $2,250 overapplied. b. $2,250 underapplied. c. $15,000 overapplied. d. $15,000 underapplied. Save Answer 67. (Points: 1) The Watts Company uses predetermined overhead rates to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine hours in Dept. B. At the beginning of the year, the company made the following estimates: Dept. A = first figure; Dept. B = second figure Direct labor cost: $30,000; $40,000 Manufacturing overhead: 60,000; 50,000 Direct labor hours: 6,000; 8,000 Machine hours: 2,000; 10,000 What predetermined overhead rates would be used in Dept A and Dept B, respectively? a. 50% and $8.00 b. 50% and $5.00 c. $15 and 110% d. 200% and $5.00 Save Answer 68. (Points: 1) Kelsh Company uses a predetermined overhead rate based on machine hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for next year: Direct materials: $10,000 Direct labor: 30,000 Sales commissions: 40,000 Salary of production supervisor: 20,000 Indirect materials: 4,000 Advertising expense: 8,000 Rent on factory equipment: 10,000 Kelsh estimates that 5,000 direct labor hours and 10,000 machine hours will be worked during the year. The predetermined overhead rate per hour will be: a. $6.80. b. $6.40. c. $3.40. d. $8.20. Save Answer 69. (Points: 1) Lucy Sportswear manufactures a specialty line of T-shirts. The company uses a job-order costing system. During March, the following costs were incurred on Job ICU2: direct materials $13,700 and direct labor $4,800. In addition, selling and shipping costs of $7,000 were incurred on the job. Manufacturing overhead was applied a the rate of $25 per machine-hour and Job ICU2 required 800 machine-hours. If Job ICU2 consisted of 7,000 shirts, the Cost of Goods Sold per shirt was: a. $6.50 b. $6.00 c. $5.70 d. $5.50 Save Answer 70. (Points: 1) Beaver Company used a predetermined overhead rate last year of $2 per direct labor hour, based on an estimate of 25,000 direct labor hours to be worked during the year. Actual costs and activity during the year were: Actual manufacturing overhead cost incurred: $47,000 Actual direct labor hours worked: 24,000 The under- or overapplied overhead last year was: a. $1,000 underapplied. b. $1,000 overapplied. c. $3,000 overapplied. d. $2,000 underapplied. Save Answer 71. (Points: 1) Use the following to answer questions 71-76: The following T accounts are for Stanford Company: The indirect labor cost is: a. $8,000. b. $15,000. c. $18,000. d. $37,000. Save Answer 72. (Points: 1) The cost of goods manufactured is: a. $82,000. b. $64,000. c. 71,000. d. $62,000. Save Answer 73. (Points: 1) The cost of goods sold (after adjustment for under- or overapplied overhead) is: a. $58,000. b. $69,000. c. $72,000. d. $65,000. Save Answer 74. (Points: 1) The manufacturing overhead applied is: a. $24,000. b. $31,000. c. $38,000. d. $42,000. Save Answer 75. (Points: 1) The cost of direct materials used is: a. $14,000. b. $15,000. c. $18,000. d. $24,000. Save Answer 76. (Points: 1) The ending Work in Process account balance would be: a. $13,000. b. $75,000. c. $20,000. d. $64,000. Save Answer 77. (Points: 1) Process costing would be appropriate for each of the following except: a. custom furniture. b. oil refining. c. grain milling. d. newsprint production. Save Answer 78. (Points: 1) An operation costing system is: a. identical to a process costing system except that actual manufacturing overhead costs are traced to units of product. b. the same as a process costing system except that direct materials costs are accounted for in the same way as in job order costing. c. the same as a job order system except that direct materials costs are accounted for in the same way as in process costing. d. identical to a job order costing system except that actual manufacturing overhead costs are traced to units of product. Save Answer 79. (Points: 1) David Company uses the weighted-average method in its process costing system. The first processing department, the Welding Department, started the month with 20,000 units that were 80% complete with respect to conversion costs. The conversion cost in this beginning work in process inventory was $123,200. An additional 65,000 units were started into production during the month. There were 19,000 units in the ending work in process inventory of the Welding Department that were 10% complete with respect to conversion costs. A total of $389,250 in conversion costs were incurred in the department during the month. What would be the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) a. $7.547 b. $7.700 c. $4.634 d. $5.988 Save Answer 80. (Points: 1) Larner Company uses the weighted-average method in its process costing system. Operating data for the first processing department for the month of June appear below: Units = first figure; Percentage complete = second figure Beginning work in process inventory: 24,000; 40% Started into production during June: 86,000 Ending work in process inventory: 19,000; 20% According to the company's records, the conversion cost in beginning work in process inventory was $68,064 at the beginning of June. Additional conversion costs of $585,324 were incurred in the department during the month. What was the cost per equivalent unit for conversion costs for the month? (Round off to three decimal places.) a. $6.892 b. $6.806 c. $5.575 d. $7.090 Save Answer 81. (Points: 1) The Morgan Company uses the weighted-average method in its process costing system. For a particular department, the company had 54,000 equivalent units of production with respect to conversion costs in March. There were 7,500 units in the department's beginning work in process inventory, two thirds complete with respect to conversion costs. During March, 52,500 units were started and 50,000 were completed and transferred out of the department. The ending work in process inventory in the department: a. consisted of 5,000 units. b. consisted of 2,500 units. c. was 65% complete with respect to conversion costs. d. was 40% complete with respect to conversion costs. Save Answer 82. (Points: 1) Expense A is a fixed cost; expense B is a variable cost. During the current year the activity level has increased, but is still within the relevant range. In terms of cost per unit of activity, we would expect that: a. expense A has remained unchanged. b. expense B has decreased. c. expense A has decreased. d. expense B has increased. Save Answer 83. (Points: 1) Within the relevant range of activity, variable cost per unit will: a. increase in proportion with the level of activity. b. remain constant. c. vary inversely with the level of activity. d. none of these. Save Answer 84. (Points: 1) The ratio of fixed expenses to the unit contribution margin is the: a. break-even point in unit sales. b. profit margin. c. contribution margin ratio. d. margin of safety. Save Answer 85. (Points: 1) The margin of safety percentage is computed as: a. Break-even sales/Total sales. b. Total sales - Break-even sales. c. (Total sales - Break-even sales)/Break-even sales. d. (Total sales - Break-even sales)/ Total sales. Save Answer 86. (Points: 1) The degree of operating leverage can be calculated as: a. contribution margin divided by sales. b. gross margin divided by net income. c. net income divided by sales. d. contribution margin divided by net income. Save Answer 87. (Points: 1) A company has provided the following data: Sales: 3,000 units Sales price: $70 per unit Variable cost: $50 per unit Fixed cost: $25,000 If the dollar contribution margin per unit is increased by 10%, total fixed cost is decreased by 20%, and all other factors remain the same, net income will: a. increase by $61,000. b. increase by $20,000. c. increase by $3,500. d. increase by $11,000. Save Answer 88. (Points: 1) Last year, Twins Company reported $750,000 in sales (25,000 units) and a net income of $25,000. At the break-even point, the company's total contribution margin equals $500,000. Based on this information, the company's: a. contribution margin ratio is 40%. b. break-even point is 24,000 units. c. variable expense per unit is $9. d. variable expenses are 60% of sales. Save Answer 89. (Points: 1) The break-even point in sales for Rice Company is $360,000 and the company's contribution margin ratio is 30%. If Rice Company desires an income of $84,000, sales would have to total a. $280,000. b. $640,000. c. $480,000. d. $560,000. Save Answer 90. (Points: 1) Marling Corporation has budgeted the following data: Expected sales: $600,000 Variable expenses: 420,000 Fixed expenses: 120,000 What is the break-even in sales dollars? a. $400,000 b. $420,000 c. $540,000 d. $660,000 Save Answer 91. (Points: 1) Last year, Perry Company reported profits of $4,200. It's variable expenses totaled $66,000 or $6 per unit. The unit contribution margin was $3.00. The break-even point in units for Perry Company is: a. $11,000. b. $9,600. c. $12,400. Save Answer 92. (Points: 1) The following information pertains to Rica Company: Sales (50,000 units) $1,000,000 Manufacturing costs: Variable 340,000 Fixed 70,000 Selling and admin. expenses: Variable 10,000 Fixed 60,000 How much is Rica's break-even point in number of units? a. 9,848 b. 10,000 c. 18,571 d. 26,000 Save Answer 93. (Points: 1) Carver Company produces a product which sells for $30. Variable manufacturing costs are $15 per unit. Fixed manufacturing costs are $5 per unit based on the current level of activity, and fixed selling and administrative costs are $4 per unit. A selling commission of 10% of the selling price is paid on each unit sold. The contribution margin per unit is: a. $3. b. $15. c. $8. d. $12. Save Answer 94. (Points: 1) At a break-even point of 400 units sold, variable expenses were $4,000 and fixed expenses were $2,000. What will the 401st unit sold contribute to profit? a. $0. b. $5. c. $10. d. $15. Save Answer 95. (Points: 1) The following data pertain to Wistron Company's two products: Product X Product Y Sales in dollars $100,000 $80,000 Contribution margin ratio 48% 30% If fixed expenses for the company as a whole are $60,000 and the product mix is constant, the overall break-even point for the company would be: a. $150,000. b. $153,846. c. $100,000. d. $132,000. Save Answer 96. (Points: 1) The following monthly data are available for the Phelps Company: Product A Product B Product C Total Sales $150,000 $130,000 $90,000 $370,000 Variable expenses 91,000 104,000 27,000 222,000 Contribution margin $ 59,000 $ 26,000 $63,000 148,000 Fixed expenses 55,000 Net income $ 93,000 The break-even sales for the month for the company are: a. $91,667. b. $203,000. c. $148,000. d. $137,500. Save Answer 97. (Points: 1) The following data pertain to last month's operations: Selling price: $20 per unit Variable production cost: $12 per unit Fixed production cost: $3,000 Variable selling & admin. expense: $3 per unit Fixed selling & admin. expenses: $1,500 The break-even point in dollars is: a. $18,000. b. $6,000. c. $11,250. d. $7,500. Save Answer 98. (Points: 1) Roberts Company sells a single product at a selling price of $55 per unit. Variable costs are $30.25 per unit and fixed costs are $113,850. Roberts Company's break-even point is: a. $207,000. b. 3,764 units. c. $253,000. d. 2,070 units. Save Answer 99. (Points: 1) A total of 30,000 units were sold last year. The contribution margin per unit was $2, and fixed expenses totaled $20,000 for the year. This year fixed expenses are expected to increase to $26,000, but the contribution margin per unit will remain unchanged at $2. How many units must be sold this year to earn the same net income as was earned last year? a. 23,000 b. 33,000 c. 30,000 d. 13,000 Save Answer 100. (Points: 1) Wilson Company prepared the following preliminary budget assuming no advertising expenditures: Selling price: $10 per unit Unit sales: 100,000 Variable expenses: $600,000 Fixed expenses: $300,000 Based on a market study, the company estimated that it could increase the unit selling price by 15% and increase the unit sales volume by 10% if $100,000 were spent on advertising. Assuming that these changes are incorporated in its budget, what should be the budgeted net income? a. $175,000 b. $190,000 c. $205,000 d. $365,000 Save