Sample Multiple Choice Exam Accounting 326
45 questions; chapters are in parentheses;
answers are after the 45 questions.
(16) 1. An advantage of using a bar chart to analyze
customer profitability is:
a.
differences in customer contribution margins stand out
b.
loss customers stand out
c.
the information usually applies to several accounting periods.
d.
all of the above are advantages of using a bar chart to analyze customer
profitability
Use the information below to answer the following
questions.
Bear Company has the following information:
Month Budgeted
Purchases
January $26,800
February 29,000
March 30,520
April 29,480
May 27,680
Purchases
are paid for in the following manner:
10
percent in the month of purchase
50
percent in the month after purchase
40
percent two months after purchase
(6) 2. What is the expected
Accounts Payable balance as of May 31?
a.
$11,792
b.
$24,912
c.
$36,704
d.
$2,948
(22) 3. Which of
the following statements is FALSE?
a. A
centralized structure does not empower employees to handle customer complaints
directly.
b. A
decentralized structure forces top management to lose some control over the
organization.
c.
Decentralization slows responsiveness to local needs for decision making.
d.
The extent to which decisions are pushed downward and the types of decisions
which are pushed down provide a measure of the level of
centralization/decentralization in an organization.
(9) 4. Deano
Martini Company, has the following information for the current year:
Beginning
fixed manufacturing overhead in inventory $95,000
Fixed
manufacturing overhead in production 75,000
Ending
fixed manufacturing overhead in inventory 25,000
Beginning
variable manufacturing overhead in inventory 10,000
Variable
manufacturing overhead in production 50,000
Ending
variable manufacturing overhead in inventory 15,000
What would be the total difference between operating
incomes under absorption costing and variable costing?
a.
$70,000
b.
$50,000
c.
$40,000
d.
$5,000
(22)5. Division A sells soybean paste internally to
Division B, which, in turn, produces soybean burgers that sell for $5 per pound.
Division A incurs costs of $0.75 per pound, while Division B incurs additional
costs of $2.50 per pound. What is Division A's operating income per pound,
assuming the transfer price of the soybean paste is set at $1.25 per pound?
a.
$0.500
b.
$0.875
c.
$1.250
d.
$1.625
Use the information below to answer the following questions.
American Company produces flags. The company uses
the following direct cost categories:
Category Standard
Inputs Std.
Cost for 1output per input
Direct
Materials 2.00 $12.50
Direct
Labor 0.70 9.50
Direct
Marketing 0.27 5.50
Actual
performance and budgeted performance for the company is shown below:
ACTUAL
Actual
output: (in units) 3,000
Direct
Materials:
Materials
costs $89,700
Input
purchased and used 11,500
Actual
price per input $13.00
Direct
Manufacturing Labor:
Labor
costs $28,500
Labor-hours
of input 4,750
Actual
price per hour $10.00
Direct
Marketing Labor:
Labor
costs $12,000
Labor-hours
of input 2,500
Actual
price per hour $8.00
(7) 6. What is
the combined total of the flexible budget variances?
a.
$30,795.00 unfavorable
b.
$29,700.00 unfavorable
c.
$23,550.00 unfavorable
d.
$22,545.00 favorable
(23) 7. Which of
the following statements is true?
a.
The economic, legal, political, social and cultural environments differ across
countries.
b.
Governments in some countries may impose controls and limit selling prices of a
company's products.
c.
Because of advances in telecommunications and transportation, the availability
of materials and skilled labor does not differ significantly across countries.
d.
both a and b are correct
(16) 8. A reason for a manager to be cautious when
deciding to drop customers based upon customer profitability profiles include:
a.
Short-run customer profitability (or unprofitability) may be different from
long-run profitability
b.
Fixed costs may be incorrectly assigned to a customer(s)
c.
Some customers may be excellent long-run prospects for additional business
d.
both a and c are correct
Use the information below to answer the following
questions.
Computer Monitors, Inc., currently sells 17"
monitors for $270. It has costs of $210. A competitor is bringing a new
17" monitor to market that will sell for $225. Management believes it must
lower the price to $225 to compete in the market for 17" monitors.
Marketing believes that the new price will cause sales to increase by 10
percent, even with a new competitor in the market. Computer Monitor, Inc.'s
sales are currently 10,000 monitors per year.
(12) 9. What is the change in operating income if
marketing is correct and only the sales price is changed?
a.
$165,000
b.
$45,000
c.
$(165,000)
d.
$(435,000)
(22) 10. Which of the different transfer-pricing
methods preserves sub-unit autonomy?
a.
Market based pricing
b.
cost based pricing
c.
negotiated pricing
d.
both a and c.
Use the information below to answer the following
questions.
Sandy Company manufactures three sizes of chairs:
small, medium and large. Potential sales include 100 small chairs, 120 medium
chairs, and 100 large chairs. The maximum machine-hours available is 6,000 per
week. Product information is provided below.
Small Medium Large
Unit
selling price $150 $250 $500
Unit
manufacturing costs:
Variable (60) (120) (200)
Fixed (40) (50) (120)
Unit
gross profit $50 $80 $180
Machine-hours
per unit 20 40 100
Variable selling and administrative expenses are $30
per unit for all products. Fixed manufacturing costs of $30,000 are assigned at
the rate of $2.50 per machine-hour.
(11) 11. How many of each product should be produced
per month using the short-run strategy?
Small Medium Large
a. 0 120 12
b. 100 0 40
c. 100 100 0
d. 100 20 40
Use the information below to answer the following
questions.
Ceylon Tea Products has an exclusive contract with
British Distributors. Two brands of teas are imported, Calamine and Ceylon, and
sold to retail outlets. The monthly budget for the contract is based on a
combination of last year's performance, a forecast of general industry sales,
and the company's expected share of the U.S. market for imported tea. The
following information is provided for the month of May:
Budgeted Actual
Calamine
Ceylon Calamine
Ceylon
Price
per lb. $2.00 $3.00 $2.50 $2.50
Variable
cost per lb. 1.00 1.50 1.00 2.00
Cont.
margin $1.00 $1.50 $1.50 $0.50
Sales
(in lbs.) 2,000 1,500 1,700 1,800
Budgeted
fixed costs are $1,750. Actual
fixed costs are $2,000.
(16) 12. Ceylon Tea Products has an exclusive
contract with British Distributors. Two brands of teas are imported, Calamine
and Ceylon, and sold to retail outlets. The monthly budget for the contract is
based on a combination of last year's performance, a forecast of general
industry sales, and the company's expected share of the U.S. market for
imported tea. The following information is provided for the month of May:
Budgeted Actual
Calamine
Ceylon Calamine
Ceylon
Price
per lb. $4.00 $6.00 $5.00 $5.00
Variable
cost per lb. 2.00 3.00 2.00 4.50
Cont.
margin $2.00 $3.00 $3.00 $0.50
Sales
(in lbs.) 4,000 3,000 3,400 3,600
Budgeted
fixed costs are $3,500. Actual
fixed costs are $4,000.
What is the total flexible budget variance?
a.
$3,400 favorable
b.
$9,000 unfavorable
c.
$3,800 unfavorable
d.
$5,600 unfavorable
(3) 13. Assuming a constant mix of 3 units of Small
for every 1 unit of Large, a selling price of $21.60 for Small and $28.80 for
Large, variable costs per unit of $14.40 for Small and $16.80 for Large, and
total fixed costs of $53,760, the break-even point in units would be
a.
4,800 units of Small and 1,600 units of Large.
b.
1,200 units of Small and 400 units of Large.
c.
1,600 units of Small and 4,800 units of Large.
d.
40,320 units of Small and 13,440 units of Large.
Use the information below to answer the following
questions.
Osborne Enterprises is developing its budgets for
19x5 and, for the first time, will use the Kaizen approach. The initial 19x5
income statement, based on static data from 19x4, is as follows:
Sales
(84,000 units) $504,000
Less:
cost of goods sold 336,000
Gross
margin $168,000
Operating
expenses (includes $33,600 of depreciation) 134,400
Net
income $33,600
Selling prices for 19x5 are expected to increase by
8 percent, and sales volume in units will decrease by 10 percent. The cost of
goods sold as estimated by the Kaizen approach will decline by 10 percent per
unit. Other than depreciation, all other operating costs are expected to
decline by 5 percent.
(6) 14. What is the budgeted gross margin for 19x5?
a.
$217,728
b.
$168,000
c.
$33,600
d.
$88,368
(16) 15. A company could have a favorable sales-mix variance and a favorable sales-quantity variance (in that order) because:
a.
the actual sales mix has more of the higher margin product, and the total
quantity sold exceeds the budgeted amount.
b.
the actual sales mix has more of the higher margin product, while the average
price received for the total quantity sold exceeds the budgeted amount.
c.
the actual sales mix does not matter , if the total quantity sold exceeds the
budgeted amount at a per unit price in excess of the budgeted price.
d.
the actual sales mix has more of the higher margin product, and the total
quantity sold is less than the budgeted amount.
Use the information below to answer the following
questions.
The Appliance Store sells two appliances as a single
package – a freezer and a refrigerator.
freezer
unit price.......................................................................... $375
refrigerator
unit price.................................................................. $825
the
two sell as a package for.................................................. $1,000
stand-alone
revenues for the freezers.............................. $775,000
stand-alone
revenues for the refrigerators................... $1,225,000
unit
manufacturing costs for the freezer................................. $180
unit manufacturing costs for the refrigerator......................... $620
(16) 16. Using the stand-alone revenue allocation
method, and allocating the package revenue based upon stand-alone product
revenues, the dollar amount that would be allocated to each freezer, and to
each refrigerator is:
a.
$312.50 and $687.50
b.
$387.50 and $612.50
c.
$375 and $625
d.
$175 and $825
(6) 17. In going from the sales budget to the
production budget, adjustments to the sales budget need to be made for
a.
finished goods inventories.
b.
overhead charges.
c.
direct materials inventories.
d.
sales returns and allowances.
Use the information below to answer the following
questions.
Ecco Company produces Plastic balls. The company uses
the following direct cost categories:
Category Standard
Inputs Std.
Cost for 1 output per input
Direct
Materials 2.00 $6.25
Direct
Labor 0.70 4.75
Direct
Marketing 0.27 2.75
Actual performance and
budgeted performance for the company is shown below:
ACTUAL
Actual
output: (in units) 5,000
Direct Materials:
Materials
costs $74,750
Input
purchased and used 11,500
Actual
price per input $6.50
Direct Manufacturing Labor:
Labor
costs $23,750
Labor-hours
of input 4,750
Actual
price per hour $5.00
Direct Marketing Labor:
Labor
costs $10,000
Labor-hours
of input 2,500
Actual
price per hour $4.00
(7) 18. What is the price variance of the direct
manufacturing labor and the direct marketing labor, respectively?
a.
$1,187.50 unfavorable; $3,125.00 unfavorable
b.
$1,465.75 unfavorable; $2,598.25 favorable
c.
$1,658.75 favorable; $2,668.75 unfavorable
d.
$2,085.75 unfavorable; $2,515.75 favorable
Use the information below to answer the following
questions.
Carter Company has two production departments,
Mixing and Finishing, served by one maintenance department. Budgeted fixed
costs for the maintenance department for 1998 were $30,000, and the variable
cost per labor hour was $4.00. Fixed maintenance costs are assigned using
long-run capacity available in hours. Other relevant data for 1998 are as
follows:
Mixing Finishing
Long-run
capacity available* 18,000 12,000
Budgeted* 12,000 10,500
Actual* 15,000 9,000
*in
labor hours
Actual maintenance department costs for 1998 were
$36,000 fixed and $100,000 variable.
(5) 19. The amount of variable maintenance costs
allocated to the Mixing Department should be
a.
$60,000.
b.
$72,000.
c.
$48,000.
d.
$62,500.
(16) 20. Which of the following is NOT one of the
items that is important to managers when analyzing sales-volume variance
information?
a.
whether budgeted and actual total units sold are equal
b.
whether the aggregated dollars give an overall picture of the product lines
c.
how many products were produced during the period
d.
the combination of the sales-volume variances for each product
Use the information below to answer the following
questions.
Singleton Company manufactures two models of pens, a
standard and a deluxe model. Three activities have been identified as cost
drivers and the related overhead costs ($96,000) pooled together to arrive at
the following information:
Number
of Number
of Number
of
Product
Setups Components DLH
Standard 11 400 75
Deluxe 14 600 45
Costs
per pool $24,000 $57,600 $14,400
(5)21. What is the total amount of overhead costs
assigned to the deluxe model assuming a traditional costing applying overhead
costs based on direct labor hours is used?
a.
$42,600
b.
$53,400
c.
$60,000
d.
$36,000
Use the information below to answer the following
questions.
Jules, Inc. is in the process of evaluating its new
products. A new transformer has two production runs each year, each with
$10,000 in setup costs. The new transformer incurred $30,000 in development
costs and is expected to be produced for three years. The direct costs of
producing the transformers are $40,000 per run of 5,000 transformers. Indirect
manufacturing costs charged to each run are $45,000. Destination charges for
each transformer average $1.00. Customer service expenses average $0.20 per
transformer. The transformers are going to sell for $25 the first year and
increase by $3 each year thereafter. Sales units equal production units each
year.
(12) 22. What is the amount of the nonrecurring
costs?
a.
$6,000
b.
$30,000
c.
$36,000
d.
$96,000
Use the information below to answer the following
questions.
Winnie Company had the following activities,
traceable costs, and physical flow of driver units:
Traceable Physical Flow of
Activities
Costs Driver
Units
Account
inquiry (hours) $400,000 10,000
hours
Account
billing (lines) 280,000 4,000,000
lines
Account
verification (accounts) 150,000 40,000
accounts
Correspondence
(letters) 50,000 4,000
letters
The above activities are
used by departments A and B as follows:
A B
Account
inquiry (hours) 2,000
hours 4,000
hours
Account
billing (lines) 400,000
lines 200,000
lines
Account
verification (accounts) 10,000
accounts 8,000
accounts
Correspondence
(letters) 1,000
letters 1,600
letters
(5) 23. How much of the traceable costs will be
assigned to Department B?
a.
$158,000
b.
$80,000
c.
$224,000
d.
$880,000
(11) 24. Information gathered by accountants from
past decisions may affect all of the following EXCEPT
a.
future predictions.
b.
the prediction method.
c.
hiring and firing policies.
d.
the decision model.
Use the information below to answer the following
questions.
Olsen, Inc. is in the process of evaluating its
manufacturing overhead costs. The results for June are as follows, and Olsen
uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to
allocate variable manufacturing overhead. Fixed overhead is allocated on a per
unit basis.
B. Budgeted amounts for June 19x1 are:
Direct
labor-hours: 0.30
/Unit
Variable
labor-hour overhead rate: $10.00
/DLH
Fixed
manufacturing overhead: $300,000
Budgeted
output (denominator level output): 30,000
Units
C. Actual amounts for June
19x1 are:
Variable
manufacturing overhead: $170,000
Fixed
manufacturing overhead: $295,000
Direct
labor-hours: 16,000
Actual
output: 40,000
(8) 25. What is the variable production volume
variance using 4-variance analysis?
a.
$6,750 unfavorable
b.
$3,000 unfavorable
c.
$0
d.
There is never a variable production volume variance.
Use the information below to answer the following
questions.
The Phil Company currently produces boxes in an
automated process. Expected production per month is 40,000 units. The required
direct materials costs $1.20 per unit. Manufacturing fixed overhead costs are
$192,000 per month. Manufacturing overhead is allocated based on units of
production.
(8) 26. What is the flexible budget for 40,000 and
20,000 units, respectively?
a.
$48,000; $24,000
b.
$240,000; $216,000
c.
$244,000; $220,000
d.
$248,000; $224,000
Use the information below to answer the following
questions.
Duffy Company had the following activities during
19x1:
Direct materials:
Beginning
inventory $50,000
Purchases 154,000
Ending
inventory 26,000
Direct
manufacturing labor 40,000
Manufacturing
overhead 30,000
Ending
work-in-process inventory 10,000
Beginning
work-in-process inventory 2,000
Ending
finished goods inventory 40,000
Beginning
finished goods inventory 60,000
(2) 27. What is Duffy's cost of goods sold during
19x1?
a.
$260,000
b.
$232,000
c.
$220,000
d.
$200,000
(8)28. There are two reasons why the
production-volume variance is NOT a good measure of the lost production
opportunity: (1) plant capacity output may be more than budgeted output, and
(2)
a.
revenue factors are considered in the analysis.
b.
the costs of unused capacity reflects only cost factors.
c.
the material costs incurred due to unused capacity are included in the
analysis.
d.
the costs of not fully using a capacity should reflect both spending and
efficiency fac>
Transfer interrupted!
Use the information below to answer the following
questions.
Presented below is information from the records of
Turkey Corporation for October:
Sales $7,200,000
Salaries and Benefits:
Selling
and administrative 800,000
Direct
manufacturing labor 1,200,000
Rent* 800,000
Utilities* 240,000
Advertising 140,000
Purchases:
Direct
materials 1,800,000
Indirect
materials 40,000
Office
supplies 84,000
Inventories: October
1 October
31
Indirect
materials $100,000 $120,000
Office
supplies 30,000 36,000
Direct
materials 880,000 320,000
Finished
goods 4,800,000 3,200,000
* Of these costs, 60 percent are assigned to
manufacturing and 40 percent to selling and administration.
(2) 29. What is the cost of direct materials used?
a.
$2,360,000
b.
$1,800,000
c.
$2,920,000
d.
$880,000
(2) 30. Goods available for sale that are not in
ending inventory
a.
are included in goods available for sale at the end of the year.
b.
are included in the work-in-process inventory at the end of the year.
c.
are not accounted for until the next year.
d.
are incorporated in the cost of goods sold amount.
(7) 31. All of the following statements about
benchmarks are true EXCEPT
a.
they may be financial or nonfinancial.
b.
they may or may not be reported in an accounting system.
c.
they are not used to compute a variance.
d.
they are used to compute a performance gap.
(11) 32. Ferris Electrical Company purchased a
machine for $50,000; current accumulated depreciation totals $20,000.
Management is contemplating the purchase of a new machine for $60,000. Current
disposal of the old machine would cost $30,000. What is the correct category
for each item?
a.
Sunk: $50,000 cost of old machine, $20,000 accumulated depreciation
relevant:
$60,000 of new machine, $30,000 of disposal of old machine
b.
Sunk: $50,000 cost of old machine
relevant:
$60,000 cost of new machine
c.
Sunk: $50,000 cost of old machine
relevant:
$60,000 cost of new machine, $30,000 disposal of old machine
d.
Sunk: $50,000 cost of old machine, $30,000 book value of old machine
relevant:
$60,000 cost of new machine, $30,000 disposal of old machine
Use the information below to answer the following
questions:
Bridal Shoppe sells wedding dresses. Each dress's
cost may be separated as follows: selling price of $1,000 and variable costs of
$400. Fixed costs are $90,000.
(3) 33. How many dresses are sold if the operating
income is zero?
a.
225 dresses
b.
150 dresses
c.
100 dresses
d.
90 dresses
(8) 34. Assume that variable manufacturing overhead
is allocated according to machine-hours. Clark Company expects to produce 400
cases of Product x using 400 machine-hours. Each machine hour is expected to
take 10 KWH of electricity, which costs $6 per KWH. What is the maximum amount
the company would be willing to pay for the new machine, based solely on
spending and efficiency variances, if a new energy-efficient machine only used
8 KWH per machine-hour?
a.
$120
b.
$4,680
c.
$4,920
d.
$4,800
Use the information below to answer the following
questions.
Waldorf Company has two sources of funds - long-term debt with a market and book value of $10 million issued at an interest rate of 12 percent, and equity capital that has a market value of $8 million (book value of $4 million). Waldorf Company has profit centers in the following locations, with the following operating incomes, total assets, and total liabilities. The cost of equity capital is 12 percent, while the tax rate is 25 percent.
Current
Operating Income Assets Liabilities
St.Louis $960,000 $4,000,000 $200,000
Cedar
Rapids $1,200,000 $8,000,000 $600,000
Wichita $2,040,000 $12,000,000 $1,200,000
(23) 35. What is the EVA for Cedar Rapids?
a.
$135,580
b.
$220,000
c.
$234,000
d.
$305,000
Use the information below to answer the following
questions.
The Lamp Shade Company makes table lamps, for which
the following standards have been developed:
Standard
Inputs Standard
Price
Expected
for Each Expected
per
Unit
of Output Unit
of Output
Direct
materials 20
pounds $2
per pound
Direct
labor 6
hours $8
per hour
During January, production of 100 lamps was
expected, but 110 lamps were actually completed.
Direct materials purchased and used were 2,100
pounds at an actual price of $2.20 per pound.
Direct labor cost for the month was $5,310, and the
actual pay per hour was $9.00.
(7) 36. The direct-material price variance for
January is
a.
$420 unfavorable.
b.
$420 favorable.
c.
$400 favorable.
d.
$400 unfavorable.
(7) 37. Standards represent the best expected level
of performance. They are usually developed from a careful study and are
expressed
a.
on a per unit basis.
b.
by a management team.
c.
through the organization's goals.
d.
through an organization's policies and procedures.
(4) 38. Manufacturing overhead costs incurred for
the month were $50,000. Utilities were $15,000, and depreciation on the
equipment was $25,000. Repairs were $10,000. Which is the correct journal entry
assuming utilities and repairs were on account?
a. Manufacturing
Overhead Control 50,000
Accounts
Payable Control 25,000
Accumulated
Depreciation Control 25,000
b. Manufacturing
Overhead Control 50,000
Accounts
Payable Control 50,000
c. Manufacturing
Overhead Control 25,000
Accumulated
Depreciation Control 25,000
d. Accumulated
Depreciation Control 25,000
Accounts
Payable Control 25,000
Manufacturing
Overhead Control 50,000
(10) 39. Which cost estimation method uses
time-series or cross-sectional data?
a.
the account analysis method
b.
the conference method
c.
the industrial engineering method
d.
the quantitative analysis method
Use the information below to answer the following
questions.
The Terrell Company uses the high-low method to
estimate the cost function. The information for 19x1 is provided below:
Machine- Labor
Hours Costs
Highest
observation of cost driver 480 $10,000
Lowest
observation of cost driver 220 7,400
(10) 40. What is the estimate of Terrell's cost
function when 400 machine-hours are used?
a.
$4,600.00
b.
$4,993.75
c.
$5,700.00
d.
$9,200.00
(9) 41. Jennings and Kramer uses FIFO for inventory
costing.
Beginning
Inventory 150
units
Units
Produced 300
units
Units
Sold 300
units
Prior
year Budgeted Fixed Overhead Rate $100/unit
Current
year Budgeted Fixed Overhead Rate $88/unit
Which of the following statements is TRUE about the
difference between absorption-costing and variable-costing operating income?
a.
Absorption-costing is $1,800 less than variable-costing operating income.
b.
Absorption-costing is $1,800 more than variable-costing operating income.
c.
Absorption-costing is $15,000 less than variable-costing operating income.
d.
Absorption-costing is $15,000 more than variable-costing operating income.
(22) 42. Employee absenteeism information would be
an example of management control information at the:
a.
total organization level
b.
customer/market level
c.
individual-facility level
d.
individual-activity level
Use the information below to answer the following
questions.
Olsen, Inc. is in the process of evaluating its
manufacturing overhead costs. The results for June are as follows, and Olsen
uses a 4-variance analysis of its manufacturing overhead costs.
A. Budgeted direct labor-hours per unit is used to
allocate variable manufacturing overhead. Fixed overhead is allocated on
a per unit basis.
B. Budgeted amounts for June 19x1 are:
Direct
labor-hours: 0.30
/Unit
Variable
labor-hour overhead rate: $10.00
/DLH
Fixed
manufacturing overhead: $300,000
Budgeted
output (denominator level output): 30,000
Units
C. Actual amounts for June 19x1 are:
Variable
manufacturing overhead: $170,000
Fixed
manufacturing overhead: $295,000
Direct
labor-hours: 16,000
Actual
output: 40,000
(8) 43. What are the fixed efficiency and the fixed production volume variances, respectively, using 4-variance analysis?
a.
no efficiency variance, $100,000 favorable
b.
$0, $100,000 unfavorable
c.
$25,250 favorable, $99,999 unfavorable
d.
$25,250 unfavorable, $99,999 favorable
Use the information below to answer the
following questions.
Alexander's incurred the following expenses
during 19x1:
Fixed
manufacturing overhead $45,000
Fixed
nonmanufacturing costs $35,000
Unit
selling price $100
Total
unit cost $40
Fixed
manufacturing overhead rate $20
Units
produced 1,340
units
(9) 44. What will be the break-even point in units
if absorption costing is used?
a.
1,330 units
b.
1,000 units
c.
887 units
d.
563 units
(22) 45. Section 482 of the U.S. Internal Revenue Code
governing the taxation of multinational transfer pricing recognizes that
transfer prices can be:
a.
market based
b.
negotiated
c.
cost-plus based
d.
both a and c.
Answers
1. b
2. c
($27,680 x 0.9) + ($29,480 x 0.4) = $36,704
3. c
4. a
$95,000 - $25,000 = $70,000
5. a
$1.25 - 0.75 = $0.50
6. a
Actual
Results Flex.
Bud. Variances
Direct Materials $89,700 $75,000.00 $14,700.00
U
Direct Mfg. Labor 28,500 19,950.00 8,550.00
U
Direct Marketing Labor 12,000 4,455.00 7,545.00
U
$30,795.00 U
7. d
8. d
9. d
[10,000
x ($270 - $210)] – [11,000 x ($225 - $210)] = $435,000
10.
d
11.
b
(100
x 20) + (40 x 100) = 6,000
Small
Large Total machine hrs.
12. d
Calamine
= 3(3,400) - 2(3,400) = $10,200 - $6,800 = $3,400 F
Ceylon
= (0.5)$3,600 - $3,600(3)
= $9,000 U
$5,600 Unfavorable
13. a
Small Large
Sales $21.60 $28.80
Variable
costs 14.40 16.80
Contribution
margin $7.20 $12.00
Sales
mix x
3 x
1
Contribution margin per mix $21.60 $12.00
Total
contribution margin per mix = $21.60 + $12.00 = $33.60
Break-even
point in composite units = $53,760/$33.60 = 1,600
Small:
1,600 x 3 = 4,800 units
Large:
1,600 x 1 = 1,600 units
14.
a
(84,000
x.9) x ($6.00 x 1.08) - (84,000 x.9) x ($4.00 x.9) = $217,728
15.
a
16.
b
Freezer
$775,000/$1,200,000 x $1,000 = $387.50
Refrigerator
$1,225,000/$2,000,000 x $1,000 = $612.50
17.
a
18.
a
Mfg.
Labor ($5.00 - $4.75) x 4,750 = $1,187.50 unfavorable
Mkt.
Labor ($4.00 - $2.75) x 2,500 = $3,125.00 unfavorable
19.
a
$4
x 15,000 = $60,000
20.
c
21.
d
[96,000
/ (75 + 45)] x 45 = $36,000
22.
b
The
only nonrecurring cost is the development costs of $30,000.
23.
c
($400,000/10,000)
x 4,000 = $160,000
($280,000/4,000,000) x
200,000 =
14,000
($150,000/40,000)
x 8,000 = 30,000
($50,000/4,000)
x 1,600 =
20,000
$224,000
24.
c
25.
d
26.
b
($1.20
x 40,000) + $192,000 = $240,000
($1.20
x 20,000) + $192,000 = $216,000
27.
a
$60,000
+ $240,000 - $40,000 = $260,000
28.
b
29.
a
$880,000
+ $1,800,000 - $320,000 = $2,360,000
30.
d
31.
c
32.
c
33.
b
$1,000N
- $400N - $90,000 = 0; $600N = $90,000; N = 150 dresses
34.
d
BVOHR
= 10 KWH/MH x $6 /KWH = $60 per MH
AVOHR
= 8 KWH/MH x $6 /KWH = $48 per MH
VOH
Flexible Variance = ($60 - $48) x 400 MH = $4,800 favorable
35.
a
36.
a
($2.20
- $2.00) x 2,100 = $420 unfavorable
37.
a
38.
a
$25,000
and $15,000 + $10,000 as given
39.
d
40. d
y = $5,200 + ($10 x 400) = $9,200
41.
a
[(150
+ 300 - 300) x $88] - (150 x $100) = $(1,800)
42.
c
43.
a
(30,000
- 40,000) x $10 = $100,000 favorable
44.
c
Break-even
units N = [($45,000 + $35,000) + [$20 x (N - 1,340)]
($100
- $20)
N =
($80,000 + $20N - $26,800)/$80
$80N
= $53,200 + $20N
N =
887 units
45.
d
Peter Chalos.
“Sample Multiple Choice Exam Accounting 326”. www.uic.edu/~pchalos . Retrieved 21
February 2001.