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Student ID: 70676798 Exam: 061401RR - Tools for Management and Aids to Decision Making When you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If you need to exit before completing the exam, click Cancel Exam. Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer. 1. Vandel Inc. bases its selling and administrative expense budget on budgeted unit sales. The sales budget shows 6,600 units are planned to be sold in April. The variable selling and administrative expense is $9.70 per unit. The budgeted fixed selling and administrative expense is $127,380 per month, which includes depreciation of $8,580 per month. The remainder of the fixed selling and administrative expense represents current cash flows. What should the cash disbursements for selling and administrative expenses on the April selling and administrative expense budget be? A. $182,820 B. $64,020 C. $191,400 D. $118,800 2. Sechrest Corporation manufactures a single product. Last year, the company's variable costing net operating income was $80,500. Fixed manufacturing overhead costs released from inventory under absorption costing amounted to $18,400. What was the absorption costing net operating income last year? A. $62,100 B. $18,400 C. $98,900 D. $80,500 3. Quinnett Corporation has two divisions: the Export Products Division and the Business Products Division. The Export Products Division's divisional segment margin is $34,300 and the Business Products Division's divisional segment margin is $86,700. The total amount of common fixed expenses not traceable to the individual divisions is $95,600. What is the company's net operating income? A. $121,000 B. $25,400 C. ($121,000) D. $216,600 4. Malley Corporation has provided the following data concerning its only product: What is the margin of safety in dollars? A. $2,085,000 B. $562,950 C. $1,522,050 D. $1,390,000 5. Bowe Corporation's fixed monthly expenses are $21,000 and its contribution margin ratio is 61%. 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 $74,000? A. $24,140 B. $7,860 C. $53,000 D. $45,140 6. Dideda Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools. How much cost, in total, would be allocated in the first-stage allocation to the Order Size activity cost pool? A. $234,000 B. $255,000 C. $150,000 D. $360,000 7. Bolding Inc.'s contribution margin ratio is 61% and its fixed monthly expenses are $42,000. 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 $126,000? A. $76,860 B. $34,860 C. $7,140 D. $84,000 8. Palomo Corporation sells a product for $170 per unit. The product's current sales are 35,200 units and its break-even sales are 25,344 units. What is the margin of safety as a percentage of sales closest to? A. 28% B. 61% C. 39% D. 72% 9. If a company decreases the variable expense per unit while increasing the total fixed expenses, the total expense line relative to its previous position will A. shift upward and have a steeper slope. B. shift upward and have a flatter slope. C. shift downward and have a flatter slope. D. shift downward and have a steeper slope. 10. Axsom Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 1,300 direct labor-hours will be required in March. The variable overhead rate is $8.90 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $20,020 per month, which includes depreciation of $2,600. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. What should the predetermined overhead rate for March be? A. $15.40 B. $22.30 C. $24.30 D. $8.90 11. Gunderman Corporation has two divisions: the Alpha Division and the Charlie Division. The Alpha Division has sales of $230,000, variable expenses of $131,100, and traceable fixed expenses of $63,300. The Charlie Division has sales of $540,000, variable expenses of $307,800, and traceable fixed expenses of $120,700. The total amount of common fixed expenses not traceable to the individual divisions is $119,200. What is the company's net operating income? A. $331,100 B. $211,900 C. $27,900 D. $147,100 12. If a cost object such as a product or customer has a negative green margin, then A. its yellow margin will be zero. B. its yellow margin will be negative. C. its yellow margin will be positive. D. its yellow margin may be either positive or negative. 13. Jennifer Company has two products: A and B. The company uses activity-based costing. The total cost and activity for each of the company's three activity cost pools are as follows: What is the activity rate under the activity-based costing system for Activity 3 closest to? A. $36.24 B. $84.56 C. $115.33 D. $38.44 14. Morganti Corporation sells a product for $140 per unit. The product's current sales are 40,700 units and its break-even sales are 31,339 units. What is the margin of safety in dollars? A. $5,698,000 B. $1,310,540 C. $3,798,667 D. $4,387,460 15. Hartung Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $147,000 per month. The company is currently selling 2,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $13 per unit. In exchange, the sales staff would accept a decrease in their salaries of $22,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 400 units. What should be the overall effect on the company's monthly net operating income of this change? A. decrease of $14,000 B. increase of $226,000 C. increase of $30,000 D. increase of $16,800 16. For July, White Corporation has budgeted production of 6,000 units. Each unit requires 0.10 direct labor-hours at a cost of $8.50 per direct labor-hour. How much will White Corporation budget for labor in July? A. $51,000 B. $600 C. $5,100 D. $5,160 17. Cleckley Corporation's operating leverage is 5.9. If the company's sales increase by 19%, its net operating income should increase by about how much? A. 112.1% B. 19.0% C. 5.9% D. 31.1% 18. Which of the following costs at a manufacturing company would be treated as a product cost under both absorption costing and variable costing? A. Option D B. Option C C. Option A D. Option B 19. A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the total gross margin for the month under absorption costing? A. $149,600 B. $179,000 C. $197,200 D. $6,800 20. Holdt Inc. produces and sells a single product. The selling price of the product is $230.00 per unit and its variable cost is $66.70 per unit. The fixed expense is $212,290 per month. What is the break-even in monthly unit sales closest to? A. 1,802 B. 3,183 C. 923 D. 1,300 End of exam