A companys current ratio and its acid-test ratio are both greater than 1. Payment of an account payable would:

Multiple Choice

• increase the acid-test ratio but the current ratio would not be affected.

• increase both the current and acid-test ratios.

• increase the current ratio but the acid-test ratio would not be affected.

• decrease both the current and acid-test ratios.

Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

• Sales are budgeted at $350,000 for November, $330,000 for December, and $320,000 for January.
• Collections are expected to be 45% in the month of sale and 55% in the month following the sale.
• The cost of goods sold is 75% of sales.
• The company would like to maintain ending merchandise inventories equal to 80% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $24,100.
• Monthly depreciation is $15,100.
• Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	20,100
Accounts receivable		70,100
Merchandise inventory		210,000
Property, plant and equipment, net of $572,100 accumulated depreciation		1,094,100
Total assets	$	1,394,300
Liabilities and Stockholders' Equity
Accounts payable	$	254,100
Common stock		820,100
Retained earnings		320,100
Total liabilities and stockholders' equity	$	1,394,300

The cost of December merchandise purchases would be:

Garrison 16e Rechecks 2017-10-03, 2018-07-24

Multiple Choice

• $247,500

• $192,000

• $241,500

• $262,500

In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by:

Multiple Choice

• the machine-hours required by the product.

• the total direct labor-hours for the activity cost pool.

• the total activity for the activity cost pool.

• the direct labor-hours required by the product.

Johansen Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for the next year:

Direct materials	$	6,000
Direct labor	$	20,000
Rent on factory building	$	15,000
Sales salaries	$	25,000
Depreciation on factory equipment	$	8,000
Indirect labor	$	12,000
Production supervisor's salary	$	15,000

Jameson estimates that 20,000 direct labor-hours will be worked during the year. The predetermined overhead rate per hour will be:

Garrison 16e Rechecks 2017-08-01

Multiple Choice

• $2.50 per direct labor-hour

• $3.00 per direct labor-hour

• $4.00 per direct labor-hour

• $2.79 per direct labor-hour

If manufacturing overhead is underapplied, then:

Garrison 16e Rechecks 2017-08-29

Multiple Choice

• the amount of manufacturing overhead cost applied to Work in Process is less than the actual manufacturing overhead cost incurred.

• the predetermined overhead rate is too high.

• the Manufacturing Overhead account will have a credit balance at the end of the year.

• actual manufacturing overhead cost is less than estimated manufacturing overhead cost.

In an effort to reduce costs, Pontic Manufacturing Corporation is considering an investment in equipment that will reduce defects. This equipment will cost $420,000, will have an estimated useful life of 10 years, and will have an estimated salvage value of $50,000 at the end of 10 years. The companys discount rate is 22%. What amount of cost savings will this equipment have to generate per year in each of the 10 years in order for it to be an acceptable project? (Ignore income taxes.).

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using the tables provided. (Round your intermediate calculations to 3 decimal places.)

Garrison 16e Rechecks 2017-09-13, 2017-12-15

Multiple Choice

• $105,315 or more

• $50,690 or more

• $94,316 or more

• $41,315 or more