Bolka Corporation, a merchandising company, reported the following results for October:

Sales	$	434,000
Cost of goods sold (all variable)	$	175,200
Total variable selling expense	$	23,700
Total fixed selling expense	$	15,500
Total variable administrative expense	$	16,000
Total fixed administrative expense	$	32,400

The contribution margin for October is:

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Multiple Choice

• $219,100
• $214,900

$258,800

$171,200

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Lagle Corporation has provided the following information:

	Cost per Unit		Cost per Period
Direct materials	$	4.95
Direct labor	$	3.30
Variable manufacturing overhead	$	1.65
Fixed manufacturing overhead				$	10,500
Sales commissions	$	1.20
Variable administrative expense	$	0.40
Fixed selling and administrative expense				$	5,000

If 3,500 units are sold, the total variable cost is closest to:

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Multiple Choice

• $34,650
• $55,750
• $40,250
• $40,425

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Pedregon Corporation has provided the following information:

	Cost per Unit		Cost per Period
Direct materials	$	6.90
Direct labor	$	3.40
Variable manufacturing overhead	$	1.70
Fixed manufacturing overhead				$	17,200
Sales commissions	$	0.90
Variable administrative expense	$	0.95
Fixed selling and administrative expense				$	6,300

If 4,000 units are produced, the total amount of manufacturing overhead cost is closest to:

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Multiple Choice

• $24,000
• $20,400
• $30,300
• $16,600

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Jilk Inc.'s contribution margin ratio is 60% and its fixed monthly expenses are $49,500. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $141,000?

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Multiple Choice

• $84,600
• $6,900
• $35,100
• $91,500

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Wimpy Inc. produces and sells a single product. The selling price of the product is $215.00 per unit and its variable cost is $66.65 per unit. The fixed expense is $405,099 per month.

The break-even in monthly dollar sales is closest to:(Round your intermediate calculations to 2 decimal places.)

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Multiple Choice

• $1,306,771
• $901,672
• $587,100
• $405,099

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Cubie Corporation has provided the following data concerning its only product:

Selling price	$	105	per unit
Current sales		11,800	units
Break-even sales		8,850	units

What is the margin of safety in dollars?

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Multiple Choice

• $1,239,000
• $309,750
• $929,250
• $696,938

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Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 28,100 machine-hours. The estimated variable manufacturing overhead was $4.47 per machine-hour and the estimated total fixed manufacturing overhead was $789,048. The predetermined overhead rate for the recently completed year was closest to:

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Multiple Choice

• $32.55 per machine-hour
• $31.55 per machine-hour
• $4.47 per machine-hour
• $28.08 per machine-hour

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Job 910 was recently completed. The following data have been recorded on its job cost sheet:

Direct materials	$	2,463
Direct labor-hours		79	labor-hours
Direct labor wage rate	$	16	per labor-hour
Machine-hours		137	machine-hours

The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $17 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 910 would be:

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Multiple Choice

• $3,380
• $3,727
• $6,056
• $6,896

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Garza Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:

	Casting	Customizing
Machine-hours		12,000		17,000
Direct labor-hours		3,000		7,000
Total fixed manufacturing overhead cost	$	51,600	$	30,800
Variable manufacturing overhead per machine-hour	$	1.40
Variable manufacturing overhead per direct labor-hour			$	3.90

The estimated total manufacturing overhead for the Customizing Department is closest to:

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Multiple Choice

• $63,300
• $27,300
• $58,100
• $30,800

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Kray Inc., which produces a single product, has provided the following data for its most recent month of operations:

Number of units produced		4,100
Variable costs per unit:
Direct materials	$	39
Direct labor	$	30
Variable manufacturing overhead	$	11
Variable selling and administrative expense	$	5
Fixed costs:
Fixed manufacturing overhead	$	336,200
Fixed selling and administrative expense	$	303,400

There were no beginning or ending inventories. The variable costing unit product cost was:

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Multiple Choice

• $162 per unit
• $80 per unit
• $85 per unit
• $74 per unit

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A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

Units in beginning inventory		0
Units produced		2,900
Units sold		2,600
Units in ending inventory		300
Variable costs per unit:
Direct materials	$	49
Direct labor	$	58
Variable manufacturing overhead	$	6
Variable selling and administrative expense	$	11
Fixed costs:
Fixed manufacturing overhead	$	55,100
Fixed selling and administrative expense	$	18,200

What is the absorption costing unit product cost for the month?

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Multiple Choice

• $124 per unit
• $132 per unit
• $113 per unit
• $143 per unit

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Data for January for Bondi Corporation and its two major business segments, North and South, appear below:

Sales revenues, North	$	759,000
Variable expenses, North	$	440,500
Traceable fixed expenses, North	$	90,900
Sales revenues, South	$	586,800
Variable expenses, South	$	334,900
Traceable fixed expenses, South	$	76,000

In addition, common fixed expenses totaled $206,000 and were allocated as follows: $107,000 to the North business segment and $99,000 to the South business segment.

A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is:

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Multiple Choice

• $120,600
• $440,500
• $227,600
• $211,500

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Testing a prototype of a new product is an example of a:

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Multiple Choice

• Unit-level activity.
• Batch-level activity.
• Product-level activity.
• Organization-sustaining activity.

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Foster Florist specializes in large floral bouquets for hotels and other commercial spaces. The company has provided the following data concerning its annual overhead costs and its activity based costing system:

Overhead costs:

Wages and salaries	$	178,000
Other expenses		51,000
Total	$	229,000

Distribution of resource consumption:

	Activity Cost Pools
	Making Bouquets	Delivery	Other	Total
Wages and salaries	45%	20%	35%	100%
Other expenses	30%	65%	5%	100%

The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.

The amount of activity for the year is as follows:

Activity Cost Pool	Activity
Making bouquets	46,995	bouquets
Delivery	11,800	deliveries

What would be the total overhead cost per delivery according to the activity based costing system? In other words, what would be the overall activity rate for the deliveries activity cost pool?(Round to the nearest whole cent.)

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Multiple Choice

$5.40

$6.69

$5.83

$4.12

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Meade Nuptial Bakery makes very elaborate wedding cakes to order. The company has an activity-based costing system with three activity cost pools. The activity rate for the Size-Related activity cost pool is $1.22 per guest. (The greater the number of guests, the larger the cake.) The activity rate for the Complexity-Related cost pool is $34.21 per tier. (Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Related activity cost pool is $85.65 per order. (Each wedding involves one order for a cake.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately.

Data concerning two recent orders appear below:

	Ericson Wedding	Haupt Wedding
Number of reception guests		78.00		230.00
Number of tiers on the cake		11.00		6.00
Cost of purchased decorations for cake	$	18.10	$	76.62

Assuming that the company charges $730.52 for the Haupt wedding cake, what would be the overall margin on the order?

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Multiple Choice

• $648.13
• $160.58
• $154.25
• $82.39

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Accepting a special order will improve overall net operating income if the revenue from the special order exceeds:

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Multiple Choice

• the contribution margin on the order.
• the incremental costs associated with the order.
• the variable costs associated with the order.
• the sunk costs associated with the order.

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Kinsi Corporation manufactures five different products. All five of these products must pass through a stamping machine in its fabrication department. This machine is Kinsi's constrained resource. Kinsi would make the most profit if it produces the product that:

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Multiple Choice

• uses the least amount of stamping time.

generates the highest contribution margin per unit.

• generates the highest contribution margin ratio.

generates the highest contribution margin per stamping machine hour.

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Sardi Inc. is considering whether to continue to make a component or to buy it from an outside supplier. The company uses 13,900 of the components each year. The unit product cost of the component according to the company's cost accounting system is given as follows:

Direct materials	$	9.70
Direct labor		6.70
Variable manufacturing overhead		2.50
Fixed manufacturing overhead		4.50
Unit product cost	$	23.40

Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 30% is avoidable if the component were bought from the outside supplier. In addition, making the component uses 2 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up for use on another product that requires 4 minutes on this machine and that has a contribution margin of $6.10 per unit.

When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component?(Round your intermediate calculations to 2 decimal places.)

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Multiple Choice

• $26.45 per unit
• $23.95 per unit
• $20.25 per unit
• $23.30 per unit

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Oriental Corporation has gathered the following data on a proposed investment project:

Investment in depreciable equipment	$	450,000
Annual net cash flows	$	90,000
Life of the equipment		10	years
Salvage value	$	0
Discount rate		7	%

The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.

The payback period for the investment would be:(Round your answer to 1 decimal place.)

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Multiple Choice

• 0.2 years
• 1.0 years
• 3.0 years
• 5.0 years

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Moates Corporation has provided the following data concerning an investment project that it is considering:

Initial investment	$	210,000
Annual cash flow	$	126,000	per year
Expected life of the project		4	years
Discount rate		9	%

Click here to viewExhibit 7B-1andExhibit 7B-2, to determine the appropriate discount factor(s) using the tables provided.

The net present value of the project is closest to:(Round your intermediate calculations and final answer to the nearest whole dollar amount.)

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Multiple Choice

• $198,114
• $210,000
• $(84,000)
• $(198,114)

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Trovato Corporation is considering a project that would require an investment of $51,000. No other cash outflows would be involved. The present value of the cash inflows would be $58,140. The profitability index of the project is closest to (Ignore income taxes.):

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Multiple Choice

• 0.86
• 0.14
• 1.14
• 0.12

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The usual starting point for a master budget is:

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Multiple Choice

• the direct materials purchase budget.
• the budgeted income statement.
• the sales forecast or sales budget.
• the production budget.

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Parwin Corporation plans to sell 38,000 units during August. If the company has 15,500 units on hand at the start of the month, and plans to have 16,500 units on hand at the end of the month, how many units must be produced during the month?

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Multiple Choice

• 39,000
• 37,000
• 54,500
• 53,500

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Depasquale Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.51 direct labor-hours. The direct labor rate is $8.90 per direct labor-hour. The production budget calls for producing 6,900 units in May and 7,300 units in June. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months?

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Multiple Choice

• $31,319.10
• $33,134.70
• $32,226.90
• $64,453.80

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In a flexible budget, what will happen to fixed costs as the activity level increases?

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Multiple Choice

• The fixed cost per unit will decrease.
• The fixed cost per unit will remain unchanged.
• The fixed cost per unit will increase.
• Fixed costs are not included in a flexible budget.

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Bade Midwifery's cost formula for its wages and salaries is $1,250 per month plus $244 per birth. For the month of October, the company planned for activity of 105 births, but the actual level of activity was 101 births. The actual wages and salaries for the month was $26,915. The activity variance for wages and salaries in October would be closest to:

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Multiple Choice

• $45 U
• $976 F
• $976 U
• $45 F

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Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 8,400 units, but its actual level of activity was 8,450 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May:

Data used in budgeting:

	Fixed element per month	Variable element per unit
Revenue		-		$	35.90
Direct labor	$	0		$	6.50
Direct materials		0			11.90
Manufacturing overhead		41,000			2.20
Selling and administrative expenses		27,200			0.50
Total expenses	$	68,200		$	21.10

Actual results for May:

Revenue	$	302,100
Direct labor	$	54,310
Direct materials	$	99,230
Manufacturing overhead	$	52,000
Selling and administrative expenses	$	30,640

The revenue variance for May would be closest to:

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Multiple Choice

• $540 U
• $1,255 U
• $1,255 F
• $540 F

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An unfavorable materials quantity variance indicates that:

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Multiple Choice

• actual usage of material exceeds the standard material allowed for output.
• standard material allowed for output exceeds the actual usage of material.
• actual material price exceeds standard price.
• standard material price exceeds actual price.

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The following labor standards have been established for a particular product:

Standard labor-hours per unit of output		9.8	hours
Standard labor rate	$	13.60	per hour

The following data pertain to operations concerning the product for the last month:

Actual hours worked		7,600	hours
Actual total labor cost	$	100,320
Actual output		950	units

What is the labor efficiency variance for the month?

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Multiple Choice

• $26,296 F
• $26,296 U
• $22,572 F
• $23,256 F

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Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month:

Budgeted level of activity		8,400	MHs
Actual level of activity		8,600	MHs
Standard variable manufacturing overhead rate	$	7.10	per MH
Actual total variable manufacturing overhead	$	58,650

What was the variable overhead rate variance for the month?

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Multiple Choice

• $1,427 Favorable
• $990 Favorable
• $1,420 Unfavorable
• $2,410 Favorable

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BR Company has a contribution margin of 12%. Sales are $629,000, net operating income is $75,480, and average operating assets are $142,000. What is the company's return on investment (ROI)?

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Multiple Choice

• 4.4%
• 12.0%
• 53.2%
• 0.2%

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The following data has been provided for a company's most recent year of operations:

Return on investment		32	%
Average operating assets	$	40,000
Minimum required rate of return		20	%

The residual income for the year was closest to:

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Multiple Choice

$4,800

$11,800

$9,600

$19,200

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Tanouye Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below:

	Hours
Wait time	27.3
Process time	2.3
Inspection time	0.2
Move time	0.3
Queue time	6.2

The throughput time was:

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Multiple Choice

• 36.3 hours
• 33.5 hours
• 9.0 hours
• 2.8 hours

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