Question 1:

Assume the following information pertaining to Star Company:

Prime costs	$ 202,000
Conversion costs	235,000
Direct materials used	89,900
Beginning work in process	104,300
Ending work in process	83,800

Total manufacturing cost is calculated to be:

Multiple Choice

$324,900.

$33,000.

$112,100.

$347,100.

$122,900.

Question #2

The following information was taken from the accounting records of Elliott Manufacturing Corporation. Unfortunately, some of the data were destroyed by a computer malfunction.

Sales Revenue	$ 61,750
Finished Goods Inventory, Beginning	10,250
Finished Goods Inventory, Ending	7,000
Cost of Goods Sold	?
Gross Margin	28,250
Direct Materials Used	10,750
Selling and Administrative Expense	?
Operating Income	15,000
Work-in-Process Inventory, Beginning	?
Work-in-Process Inventory, Ending	5,750
Direct Labor Used	9,375
Factory Overhead	12,500
Total Manufacturing Cost	?
Cost of Goods Manufactured	?

Cost of goods manufactured is calculated to be:

Multiple Choice

$32,250.

$30,250.

$33,500.

$38,250.

$27,250.

Question #3

Conrad, Incorporated recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records.

Cost of Goods Sold	$ 66,000
Work-in-Process Inventory, Beginning	10,900
Work-in-Process Inventory, Ending	9,200
Selling and Administrative Expense	15,500
Finished Goods Inventory, Ending	15,550
Finished Goods Inventory, Beginning	?
Direct Materials Used	?
Factory Overhead Applied	12,200
Operating Income	14,110
Direct Materials Inventory, Beginning	11,090
Direct Materials Inventory, Ending	6,070
Cost of Goods Manufactured	60,940

Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The Chief Financial Officer of Conrad, Incorporated has asked you to recalculate the following accounts and to report to him by the end of the day.

What is the amount of direct materials purchased?

Multiple Choice

$23,720.

$28,740.

$31,220.

$36,220.

$22,180.

Question #4

GigaBite Company's computer system recently crashed, erasing much of the company's financial data. The following accounting information was discovered soon afterwards on the Chief Financial Officer's back-up computer data.

Cost of Goods Sold	$ 394,000
Work-in-Process Inventory, Beginning	33,500
Work-in-Process Inventory, Ending	44,200
Selling and Administrative Expense	56,300
Finished Goods Inventory, Ending	17,100
Finished Goods Inventory, Beginning	?
Direct Materials Purchased	186,400
Factory Overhead Applied	133,000
Operating Income	29,700
Direct Materials Inventory, Beginning	22,200
Direct Materials Inventory, Ending	6,700
Cost of Goods Manufactured	354,000
Direct Labor	65,500

The Chief Financial Officer of GigaBite Company has asked you to recalculate the following accounts and report to him by week's end.

What should be the amount of direct materials available for use?

Multiple Choice

$133,000.

$201,900.

$208,600.

$225,700.

$210,200.

Question #5

effrey's Bottling Company incurred the following costs during November:

Conversion costs	$ __________
Prime costs	260,000
Manufacturing overhead	207,000

If direct materials cost was $164,000 in November, what was the conversion cost for November?

Multiple Choice

$303,000

$288,000

$263,000

$283,000

$298,000

Question #6

Split Corporation manufactures products X, Y, and Z from a joint production process. Joint costs are allocated to products based on relative sales values of the products at the split-off point. Additional information is as follows:

	X	Y	Z	Total
Units produced	29,000	25,000	21,000	75,000
Allocated joint costs	$ 450,000	$ 240,000	$ 210,000	$ 900,000
Sales value at split-off	?	320,000	280,000	1,200,000
Additional costs for further processing	83,000	75,000	52,000	210,000
Sales value if processed further	607,000	504,000	466,000	1,577,000

Based solely on a relevant cost analysis, which of the three products should be processed by Split beyond the split-off point?

Multiple Choice

Only X

Only Y

Only Z

Only Y and Z

All three products: X,Y and Z

Question #7

he Blade Division of Dana Company produces hardened steel blades. Approximately one-third of the Blade Division's output is sold to the Lawn Products Division of Dana; the remainder is sold to outside customers. Blade Division's estimated sales and cost data for the year ending June 30^th are as follows:

	Sales to Lawn Products Division	Sales to Outsiders
Revenue	$ 16,500	$ 44,000
Variable costs	11,000	22,000
Fixed costs	3,200	7,500
Gross margin	$ 2,300	$ 14,500
Unit sales	11,000	22,000

The Lawn Products Division has an opportunity to purchase, on a continual basis, 11,000 blades (of identical quality) from an outside supplier, at a cost of $1.30 per unit. Assume that the Blade Division cannot sell any additional products to outside customers. Assume, too, that there are no short-term avoidable fixed costs. Based solely on short-term financial considerations, should Dana allow its Lawn Products Division to purchase the blades from the outside supplier, and why?

Multiple Choice

Yes, because buying the blades would save Dana Company $1,000.

No, because making the blades would save Dana Company $1,900.

Yes, because buying the blades would save Dana Company $3,300.

No, because making the blades would save Dana Company $3,300.

No, because making the blades would save Dana Company $4,300.

Question #8

The Wave Runner is a takeout food store at a popular beachside resort. Teresa Texton, owner of The Wave Runner, was deciding how much refrigerator space to devote to four different beverages. Appropriate data on the four beverages follow:

	Limeade	Lemonade	Ginger Ale	Grape Juice
Sales price per case	$ 22.20	$ 28.00	$ 21.20	$ 47.10
Variable cost per case	15.70	17.90	16.20	35.50
Cases sold per foot of shelf space per day	34	29	7	4

The contribution per foot of shelf space per day for Limeade is:

Multiple Choice

$224.00.

$221.00.

$213.00.

$193.40.

$212.90.

Question #9

Triad Children's Center (TCC), a non-profit organization, uses relevant cost analysis to determine whether new services are desirable. TCC is looking at adding a new educational program for grade school children who are having difficulty with their reading and math skills. The following relevant costs are expected if the program is accepted:

Costs (per year)
Program Director salary	$ 49,000
Part-time Assistants	$ 28,000
Variable cost per child	$ 600

TCC estimates that a maximum of 40 children will participate in this program in the first year. If TCC decides to implement this program, funding will be received from the City Chamber of Commerce ($58,000) and a local Private University Endowment Fund ($31,000).

Calculate the expected surplus or deficit from operations given the above information.

Multiple Choice

$22,000 surplus.

$4,000 surplus.

$11,000 deficit.

$12,000 deficit.

Some amount other than those listed here.

Question #10

Smooth Enterprises manufactures two products, boat wax and car wax, in two departments, Mixing and Packaging. The Mixing Department has 800 hours per month available while the Packaging Department has 1,300 hours per month available. Production of the two products cannot exceed 38,000 pounds. Data on the two products follow:

Product	Contribution Margin (per 100 pounds)	Hours per 100 pounds of Output: Mixing (M)	Hours per 100 Pounds of Output: Packaging (P)
Boat wax (B)	$ 110	7.0	3.9
Car wax (C)	$160	2.6	3.0

The Mixing Department (M) constraint for the Smooth linear program would be (where B and C are expressed in 100-pound units of output):

Multiple Choice

2.6M + 3P 38,000.

7B + 2.6C 800.

7B + 2.6C 800.

7B + 2.6C = 800.

9.6M + 6.9P 38,000.