Question 1:

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 $ 397,000

Work-in-Process Inventory, Beginning 34,250

Work-in-Process Inventory, Ending 45,100

Selling and Administrative Expense 57,650

Finished Goods Inventory, Ending 17,550

Finished Goods Inventory, Beginning ?

Direct Materials Purchased 189,700

Factory Overhead Applied 137,500

Operating Income 31,350

Direct Materials Inventory, Beginning 23,100

Direct Materials Inventory, Ending 6,850

Cost of Goods Manufactured 357,000

Direct Labor 67,750

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?

A. $137,500.

B. $205,950.

C. $212,800.

D. $230,350.

E. $214,100.

Question #2:

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

Conversion costs	$ __________
Prime costs	265,000
Manufacturing overhead	211,000

If direct materials cost was $167,000 in November, what was the conversion cost for November?

A. $309,000

B. $294,000

C. $269,000

D. $289,000

E. $304,000

Question #3

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	27,000	23,000	19,000	69,000
Allocated joint costs	$ 408,800	$ 219,000	$ 189,800	$ 817,600
Sales value at split-off	?	300,000	260,000	1,120,000
Additional costs for further processing	77,000	69,000	48,000	194,000
Sales value if processed further	566,000	463,000	425,000	1,454,000

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

A. Only X

B. Only Y

C. Only Z

D. Only Y and Z

E. All three products: X,Y and Z

Question #4

The 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	$ 42,000	$ 112,000
Variable costs	28,000	56,000
Fixed costs	7,400	39,000
Gross margin	$ 6,600	$ 17,000
Unit sales	28,000	56,000

The Lawn Products Division has an opportunity to purchase, on a continual basis, 28,000 blades (of identical quality) from an outside supplier, at a cost of $1.85 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?

A. Yes, because buying the blades would save Dana Company $17,200.

B. No, because making the blades would save Dana Company $18,000.

C. Yes, because buying the blades would save Dana Company $23,800.

D. No, because making the blades would save Dana Company $23,800.

E. No, because making the blades would save Dana Company $41,000.

Question #5

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	$ 21.90	$ 21.00	$ 21.40	$ 45.80
Variable cost per case	15.70	17.80	16.60	36.80
Cases sold per foot of shelf space per day	27	32	3	8

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

A. $170.40.

B. $167.40.

C. $159.40.

D. $139.80.

E. $159.30.

Question #6

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	$ 41,000
Part-time Assistants	$ 36,000
Variable cost per child	$ 1,200

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 ($43,000) and a local Private University Endowment Fund ($37,000).

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

A. $55,000 surplus.

B. $37,000 surplus.

C. $44,000 deficit.

D. $45,000 deficit.

E. Some amount other than those listed here.

Question 7#

Smooth Enterprises manufactures two products, boat wax and car wax, in two departments, Mixing and Packaging. The Mixing Department has 700 hours per month available while the Packaging Department has 1,200 hours per month available. Production of the two products cannot exceed 44,000 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	5.0	2.8
Car wax (C)	$160	2.3	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):

A. 2.3M + 3P 44,000.

B. 5B + 2.3C 700.

C. 5B + 2.3C 700.

D. 5B + 2.3C = 700.

E. 7.3M + 5.8P 44,000.