Crich Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the estimated direct labor-hours were 21,840 hours and the total estimated manufacturing overhead was $506,688. At the end of the year, actual direct labor-hours for the year were 21,600 hours and the actual manufacturing overhead for the year was $506,688. Overhead at the end of the year was:

Multiple Choice

• $5,568 overapplied

• $5,568 underapplied

• $5,618 underapplied

• $5,618 overapplied

A company with $690,000 in operating assets is considering the purchase of a machine that costs $78,000 and which is expected to reduce operating costs by $20,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to (Ignore income taxes.):

Multiple Choice

• 8.8 years

• 3.9 years

• 34.5 years

• 0.26 years

Creswell Corporation's fixed monthly expenses are $26,000 and its contribution margin ratio is 60%. 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 $84,000?

Multiple Choice

• $24,400

• $50,400

• $7,600

• $58,000

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 60,700 machine-hours. The estimated variable manufacturing overhead was $4.34 per machine-hour and the estimated total fixed manufacturing overhead was $1,723,880. The predetermined overhead rate for the recently completed year was closest to:

Multiple Choice

• $4.34 per machine-hour

• $32.74 per machine-hour

• $31.74 per machine-hour

• $28.40 per machine-hour

If sales volume increases and all other factors remain constant, then the:

Multiple Choice

• net operating income will decrease.

• margin of safety will increase.

• break-even point will decrease.

• contribution margin ratio will increase.

Lacrue Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.

Inputs	Standard Quantity or Hours per Unit of Output			Standard Price or Rate
Direct materials		6.3	ounces	$	5.50	per ounce
Direct labor		0.40	hours	$	22.00	per hour
Variable manufacturing overhead		0.40	hours	$	3.80	per hour

The actual output for the period was 3,700 units.

The standard amount of materials allowed for the actual output is closest to:

Garrison 16e Rechecks 2017-07-14

Multiple Choice

• 22,687 ounces

• 23,300 ounces

• 23,310 ounces

• 23,940 ounces