unit 14

The Catchem Reel Company uses an activity-based costing system toaccount for its production of fishing equipment. In the case of fishingreels, each reel has $200 of direct materials, $75 of direct labor,includes 25 parts, and requires 10 hours of machine time. Information oncosts, manufacturing activities, and cost drivers is listed below.(Note: cost per cost driver unit refers to cost per part, per hour, orper reel, respectively.)

Manufacturing Activity	Cost Driver	Cost Per Cost Driver Unit
Material handling	Number of parts	$5.00
Polishing	Machine hours (MH)	6.00
Assembling	Number of parts	3.00
Testing	Number of finished reels	10.00

What is thetotalcost to produce, polish,assemble, and test one reel?

2.	WhichONEof the following would most likelyNOTbe considered abatch-levelactivity?
	Set-up hours Purchase orders Number of inspections Factory security Movements of materials

3.	Which ONE of the following would most likelyNOTbe considered aunit-levelactivity?
	Direct labor Employee training Cost of electricity to operate production machines Direct materials

4.	Consider the following definition: A series of management decisions based on bad information that results in reducing or removing activities or segments from the organization that are actually profitable. Which ONE of the following labels matches this definition?
	Cross-subsidization Unit-based costing Activity-based management Death spiral Hierarchical product management

5.

Kamili Company has the following three manufacturing overhead costdrivers.

Cost Driver	Level of Activity	Overhead Cost
Design changes	100 changes per year	$5,000
Machine setups	2,000 setups per year	$18,000
Electricity usage	12,000 kilowatt-hours per year	$36,000

Kamili Company started and completed work on 25 different jobsduring the year. One of these jobs was Job #781. Job #781 required eightdesign changes, 20 machine setups, and 700 kilowatt-hours ofelectricity. How much manufacturing overhead should be allocated to Job#781? Note: Kamili uses activity-based costing.

$3,080

$2,860

$2,360

$3,580

$2,680

$1,550

Unit 3

Calculate WRM, Inc.'s DAYS PURCHASES IN ACCOUNTS PAYABLE in 20X4 given the following information for the years ended 12/31/20X3 and 12/31/20X4.Round to the nearest whole day.

	12/31/20X3	12/31/20X4
Cash	$ 24,528	$ 27,564
Accounts Receivable	54,777	70,923
Inventory	109,861	165,225
Accounts Payable	46,858	50,228
Sales Revenues	690,236	805,213
Cost of Goods Sold	403,284	500,385

2.

Harry Company had negative cash from operating activities, positive cash from investing activities, and positive cash from financing activities. Which ONE of the following best describes Harrys overall cash flow activities for the year?

Operations generated sufficient cash to finance the purchase of new buildings and to pay off existing debts. New loans and new stockholder investment were sought to increase the total amount of property, plant, and equipment. In order to satisfy its cash needs for the year, the company was required to seek new financing and to sell some of its existing property, plant, and equipment. Operating cash flow was large enough to pay for new buildings and to pay a large cash dividend to shareholders.

3.

Lily Company reported the following balance sheet information as of December 31, 20X4. Compute Lily Companys DEBT-TO-EQUITY RATIO as of December 31,20X4.

	12/31/20X4
Current Assets	$5,000
Long-term Assets	15,000
Current Liabilities	2,000
Long-term Liabilities	7,000
Common Stock	4,000
Retained Earnings (ending)	7,000

0.82

2.22

1.22

0.55

0.45

4.

For the year 20X4, Lorien Company reported net income of $150,000. Lorien has not provided you with all of the detailed revenues and expenses that went into the calculation of this $150,000 net income. However, you do know that sales for the year were $900,000, depreciation expense was $60,000, interest expense was $45,000, and income tax expense was $75,000. Using these data, compute Lorien Companys TIMES INTEREST EARNED RATIO for the year 20X4.

5.00 4.33 6.00 8.50

5.

For the year 20X4, Pecos Yo Company computed the following ratios related to the DuPont Framework:

Leverage	3.60
Profitability	0.11
Efficiency	0.95

In addition, Pecos Yo reported a current ratio of 1.55 as of the end of the year and earnings per share (EPS) of $2.92.Pecos Yos RETURN ON EQUITY for the year 20X4 is

0.376

0.583.

1.099.

1.703.

0.105.

Unit 5

Consider the following three cash flows: Cash paid for interest Cash paid for dividends Cash paid for purchase of a building Which ONE of the following sequences represents the CORRECT categorization of these three cash flows?

2.

During 20X4, Nancy Company had total Cost of Goods Sold of $500,000 and total Sales of $600,000. The beginning and ending balances in the accounts payable account are respectively $60,000 and $100,000. The beginning and ending balances in the inventory account are $120,000 and$135,000, respectively. The beginning and ending balances in the accounts RECEIVABLE account are respectively $100,000 and $77,000.Compute the amount of cash paid for inventory during 20X4.

$525,000-500+40-15 $475,000-500-40+15 $555,000-500+15+40 $577,000-600-23

3.

Sabo Company's financial statements show a net income of $243,000. The following items also appear on Sabos financial statements:

Depreciation expense:	$55,000
Accounts receivable decrease:	$60,000
Prepaid rent increase:	$40,000
Accounts payable decrease:	$45,000

What is Sabos net cash flow from operating activities?

$233,000

$353,000

$273,000

$243,000

$363,000

4.

DeeAnn Company's financial statements show the following:

Sales:	$300,000
Wage expense:	$120,000
Accounts receivable decrease:	$54,000
Prepaid rent increase:	$33,000
Rent Expense:	$75,000
Wages payable decrease:	$39,000
Depreciation expense:	$37,000

DeeAnn has no other revenues or expenses. What is DeeAnns net cash flow from operating activities?

$67,500

$109,500

$138,000

$87,000

$165,000

5.

Yokum Company had the following transactions for 20X1:

Collections on accounts receivable	$236,250
Payments on inventory	($168,750)
Payments for wages and salaries	($78,750)
Payments of dividends	($11,250)
Depreciation expense	($22,500)
Income taxes paid	($27,000)
Proceed received from sale of equipment	($225,000)
Utilities paid	($6,750)
Interest paid on note to local bank	($5,625)
Proceeds from issuance of common stock	($56,250)

Using the transactions above, compute the net cash flow from operating activities.

$523,125

($523,125)

$50,625

($50,625)

$225,000

($225,000)