42) The actual cost of direct materials is $10.50 per pound. The standard cost per pound is $11.75. 42) During the current period 10,000 pounds were used in production and 11,500 pounds were purchased. The standard quantity for actual units produced is 9,900 pounds. The direct materials efficiency variance is:

A) $1,175 favorable B) $16,800 unfavorable C) $1,175 unfavorable D) $1,050 favorable

43) Gardner Machine Shop uses a predetermined manufacturing overhead rate of $63.20 per direct 43) labor hour. In January, Gardener completed job number A33, which included 15 direct labor hours. Which of the following correctly describes the journal entry needed to allocate overhead to the job?

A) Debit Finished goods for $948, credit Manufacturing overhead for $948 B) Debit Work in process for $948, credit Manufacturing overhead for $948 C) Debit Manufacturing overhead for $948, credit Work in process for $948

D) Debit Cost of goods sold for $948, credit Finished goods for $948

Table 14 Simms Manufacturing is considering two alternative investment proposals with the following data:

Investment Useful life Estimated annual net cash inflows Residual value Depreciation method Required rate of return

Proposal X $620,000 8 years $130,000 $60,000 Straight-line 14%

Proposal Y $400,000 8 years $80,000 $0 Straight-line 10%

44) Refer to Table 14. The total present value of future cash inflows from Proposal Y is: 44) A) $266,750 B) $436,800 C) $426,800 D) $536,800

45) Refer to Table 14. The net present value of Proposal Y is: A) $0 B) $133,250 negative C) $26,800 positive D) $136,800 positive

45)

46) Griffith Company has budgeted purchases of inventory for December of $105,000. Expected 46) beginning inventory on December 1 and ending inventory on December 31 are $120,000 and $129,000, respectively. If cost of goods sold averages 75% of sales, what are budgeted sales for December?

A) $120,000 B) $114,000

C) $128,000 D) $152,000

10

Table 13

Atlantic Company is considering investing in specialized equipment costing $360,000. The equipment has a useful life of 5 years and a residual value of $45,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are:

Year 1 Year 2 Year 3 Year 4 Year 5

$160,000 130,000 100,000

55,000

40,000 $485,000

Atlantic Company's required rate of return is 14%.

47) Refer to Table 13. What is the accounting rate of return on the investment? 47)

A) 23.9% B) 47.9% C) 16.8% D) none of the above

ESSAY. Write your answer in the space provided or on a separate sheet of paper.

48) Mountaintop golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $50 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $25,000,000 for the golfing season. About 400,000 golfers are expected each year. Variable costs are about $8 per golfer. The Mountaintop golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost-plus approach, what price should Mountaintop charge for a round of golf?

49) Mountaintop golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $50 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $25,000,000 for the golfing season. About 400,000 golfers are expected each year. Variable costs are about $8 per golfer. The Mountaintop golf course is a price-taker and won't be able to charge more than its competitors who charge $75 per round of golf. What profit will it earn? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level?

50) Jeff's Widget Corporation produces and sells a part used in the production of bicycles. The unit costs associated with this part are as follows:

Direct materials $.14 Direct labor .30 Variable manufacturing overhead .20 Fixed manufacturing overhead .05 Total cost $.69

Saturn Company has approached Jeff's Widget Corporation with an offer to purchase 20,000 units of this part at a price of $.80. Accepting this special sales order will put idle manufacturing capacity to use and will not affect regular sales. Total fixed costs will not change.

Determine whether or not the special order should be accepted. Justify your conclusion.