Question 1: Financial statement analysis:
A. Is the application of analytical tools to general-purpose financial statements and related data for making business decisions.
B. Involves transforming accounting data into useful information for decision-making.
C. Helps users to make better decisions.
D. Helps to reduce uncertainty in decision-making.
E. All of these.
Question 2: Evaluation of company performance can include comparison and/or assessment of:
A. Past performance.
B. Current performance.
C. Current financial position.
D. Future performance and risk.
E. All of these.
Question 3: External users of financial information:
A. Are those individuals involved in managing and operating the company.
B. Include internal auditors and consultants.
C. Are not directly involved in operating the company.
D. Make strategic decisions for a company.
E. Make operating decisions for a company.
Question 4: Internal users of financial information:
A. Are not directly involved in operating a company.
B. Are those individuals involved in managing and operating the company.
C. Include shareholders and lenders.
D. Include directors and customers.
E. Include suppliers, regulators, and the press.
Question 5: The building blocks of financial statement analysis include:
A. Liquidity and efficiency.
B. Solvency.
C. Profitability.
D. Market prospects.
E. All of these.
Question 6: A company's sales in 2009 were $250,000 and in 2010 were $287,500. Using 2009 as the base year, the sales trend percent for 2010 is:
A. 87%.
B. 100%.
C. 115%.
D. 15%.
E. 13%.
Question 7: Phoenix Company reported sales of $400,000 for 2009, $450,000 for 2010, and $500,000 for 2011. Using 2009 as the base year, what were the percentage increases for 2010 and 2011 compared to the base year?
A. 80% for 2010 and 90% for 2011.
B. 88% for 2010 and 80% for 2011.
C. 88% for 2010 and 90% for 2011.
D. 112.5% for 2010 and 125% for 2011.
E. 125% for 2010 and 112.5% for 2011.
Question 8: A corporation reported cash of $14,000 and total assets of $178,300. Its common-size percent for cash equals:
A. .0785%.
B. 7.85%.
C. 12.73%.
D. 1273%.
E. 7850%.
Question 9: A company had a market price of $37.50 per share, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio equals:
A. 3.1.
B. 30.0.
C. 93.8.
D. 32.0.
E. 3.3.
Question 10: A company reports basic earnings per share of $3.50, cash dividends per share of $0.75, and a market price per share of $64.75. The company's dividend yield equals:
A. 1.16%.
B. 2.14%.
C. 4.67%.
D. 5.41%.
E. 18.50%.
Question 11: Selected current year company information follows:
Net income $15,953
Net sales 712,855
Total liabilities, beginning-year 83,932
Total liabilities, end-of-year 103,201
Total stockholders' equity, beginning-year 198,935
Total stockholders' equity, end-of-year 121,851
The total asset turnover is:
A. 2.24 times
B. 2.81 times
C. 3.64 times
D. 4.67 times
E. 6.28 times
Question 12: Selected current year company information follows:
Net income $15,953
Net sales 712,855
Total liabilities, beginning-year 83,932
Total liabilities, end-of-year 103,201
Total stockholders' equity, beginning-year 198,935
Total stockholders' equity, end-of-year 121,851
The return on total assets is:
A. 2.24%
B. 2.81%
C. 3.64%
D. 4.67%
E. 6.28%
Question 13: Last year, Smith Company sold 10,000 units of its only product. If sales increase by 15% in the current year, how will unit variable cost and unit fixed cost be affected?
Unit Variable Cost Unit Fixed Cost
A) Remains constant Remains constant
B) Increases Decreases
C) Decreases Remains constant
D) Remains constant Decreases
E) Decreases Increases
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
Question 14: A manufacturing company has a beginning finished goods inventory of $14,600, raw material purchases of $18,000, cost of goods manufactured of $32,500, and an ending finished goods inventory of $17,800. The cost of goods sold for this company is:
A. $21,200.
B. $29,300.
C. $32,500.
D. $47,100.
E. $27,600.
Question 15: Juliet Corporation has accumulated the following accounting data for the year:
Finished goods inventory, January 1 $3,200
Finished goods inventory, December 31 4,000
Total cost of goods sold 4,200
The cost of goods manufactured for the year is:
A. $ 200.
B. $1,000.
C. $5,000.
D. $6,400.
E. $8,200
Question 16: A company's prime costs total $3,000,000 and its conversion costs total $7,000,000. If direct materials are $1,000,000 and factory overhead is $5,000,000, then direct labor is:
A. $4,000,000.
B. $14,000,000.
C. $2,000,000.
D. $1,000,000.
E. $3,000,000.
Question 17: The following information relates to the manufacturing operations of the IMH Publishing Corporation for the year:
Beginning Ending
Raw materials inventory $57,000 $60,000
Finished goods 68,000 60,000
The raw materials used in manufacturing during the year totaled $118,000. Raw materials purchased during the year amount to:
A. $107,000.
B. $115,000.
C. $118,000.
D. $121,000
E. $126,000.
Question 18: Ajax Company accumulated the following account information for the year:
Begining raw materials inventory $6,000
Indirect materials cost 2,000
Indirect labor cost 5,000
Maintenance of factory equipment 2,800
Direct labor cost 7,000
Using the above information, total factory overhead costs would be:
A. $ 9,800.
B. $16,800.
C. $15,800.
D. $13,000.
E. $ 7,800.
Question 19: The following information is available for the year ended December 31:
Begining raw materials inventory $2,500
Raw materials purchases 4,000
Ending raw materials inventory 3,000
Office supplies expense 1,000
The amount of raw materials used in production for the year is:
A. $4,100.
B. $5,100.
C. $3,500.
D. $6,500.
E. $4,000
Question 20: If beginning and ending goods in process inventories are $5,000 and $15,000, respectively, and cost of goods manufactured is $170,000, what is the total manufacturing cost for the period?
A. $180,000.
B. $155,000.
C. $160,000.
D. $175,000.
E. $165,000.
The following information is available for Talking Toys, Inc., for the current year:
Direct materials used $12,500
Goods in process, January 1 50,000
Goods in process, December 1 37,000
Total Factory overhead 5,500
Direct labor used 26,500
Question 21: The total manufacturing costs incurred during the year were:
A. $13,000.
B. $44,500.
C. $57,500.
D. $94,500.
E. $89,000.
Question 22: The total cost of goods manufactured for the year was:
A. $13,000.
B. $44,500.
C. $57,500.
D. $94,500.
E. $52,000
The following information is available for Hardy Co. for the current year:
Direct materials used $5,000
Direct labor 7,000
Total Factory overhead 5,100
Beginning goods in process 3,000
Ending goods in process 4,000
Question 23: The total of Hardy Co.'s manufacturing costs added during the current year is:
A. $12,000.
B. $16,100.
C. $17,100.
D. $18,100.
E. $13,600
Question 24: Hardy Co.'s cost of goods manufactured for the current year is:
A. $12,000.
B. $16,100.
C. $17,100.
D. $18,100.
E. $13,600.
Question 25: The job order cost sheets used by Garza Company revealed the following:
Job No. Balance May 1 May Production costs
124 $1,700 $---
125 $1,200 300
126 ---- 900
Job No. 125 was completed during May and Jobs No. 124 and 125 were shipped to customers in May. What were the company's cost of goods sold for May and the goods in process inventory on May 31?
A. $3,200; $ 900.
B. $2,900; $1,200.
C. $1,200; $2,900.
D. $1,700; $1,200.
E. $4,100; $ 0.
Question 26: The Goods in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company's overhead application rate is:
A. 40%.
B. 50%.
C. 80%.
D. 200%.
E. 220%.
Question 27: The Goods in Process Inventory account for the AB Corp. follows:
Goods in process inventory
Beginning balance 4,500
Direct materials 47,100
Direct labor 29,600 ? Finished goods
Applied overhead 15,800
Ending balance 8,900
The cost of units transferred to finished goods is:
A. $ 97,000.
B. $105,900.
C. $ 88,100.
D. $ 95,200.
E. $ 92,500
Question 28: A company's overhead rate is 60% of direct labor cost. Using the following incomplete accounts, determine the cost of direct materials used.
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Goods in Process Inventory
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Finished Goods Inventory
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Beg. Bal. 100,800
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Beg. Bal. 118,200
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D.M. ?
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324,800
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301,000
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D.L. ?
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O.H. ?
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F. G. ?
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End. Bal. 131,040
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End. Bal. 142,000
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Factory Overhead
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93,240
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90,720
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A. $106,400.
B. $113,120.
C. $ 30,240.
D. $211,680.
E. $324,800.
Question 29: Penn Company uses a job order cost accounting system. In the last month, the system accumulated labor time tickets totaling $24,600 for direct labor and $4,300 for indirect labor. These costs were accumulated in Factory Payroll as they were paid. Which entry should Penn make to assign the Factory Payroll?
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Payroll Expense........................................................
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28,900
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A. Cash.....................................................................................
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28,900
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Payroll Expense........................................................
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24,600
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Factory Overhead.....................................................
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4.300
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B. Factory Payroll................................................
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28,900
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Goods in Process Inventory.......................................
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24,600
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Factory Overhead.....................................................
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4,300
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Factory Payroll.................................................
c.
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28,900
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Goods in Process Inventory.......................................
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24,600
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Factory Overhead.....................................................
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4,300
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Accrued Wages Payable.....................................
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28,900
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D.
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Goods in Process Inventory......................................
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28,900
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E. Factory Payroll..........................................................
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28,900
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Question 30: A company has an overhead application rate of 125% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $20,000?
A. $ 5,000.
B. $ 16,000.
C. $ 25,000.
D. $125,000.
E. $250,000.
Question 31: Canoe Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. Canoe Company's production costs for the year were: direct labor, $30,000; direct materials, $50,000; and factory overhead applied, $6,000. The overhead application rate was:
A. 5.0%.
B. 12.0%.
C. 20.0%.
D. 500.0%.
E. 16.7%.
Question 32: Alton Company has an overhead application rate of 160% and allocates overhead based on direct materials. During the current period, direct labor is $50,000 and direct materials used are $80,000. Determine the amount of overhead Alton Company should record in the current period.
A. $ 31,250
B. $ 50,000
C. $ 80,000.
D. $ 128,000.
E. $ 208,000.
Question 33: BVD Company uses a job order cost accounting system and last period incurred $80,000 of overhead and $100,000 of direct labor. BVD estimates that its overhead next period will be $75,000. It also expects to incur $100,000 of direct labor. If BVD bases applied overhead on direct labor cost, their overhead application rate for the next period should be:
A. 75%.
B. 80%.
C. 107%.
D. 125%.
E. 133%.
Question 34: O.K. Company uses a job order cost accounting system and allocates its overhead on the basis of direct labor costs. O.K. expects to incur $800,000 of overhead during the next period, and expects to use 50,000 labor hours at a cost of $10.00 per hour. What is O.K. Company's overhead application rate?
. 6.25%.
B. 62.5%.
C. 160%.
D. 1600%.
E. 67%.
Question 35: The R&R Company's production costs for August are: direct labor, $13,000; indirect labor, $6,500; direct materials, $15,000; property taxes on production equipment, $800; heat, lights and power, $1,000; and insurance on plant and equipment, $200. R&R Company's factory overhead incurred for August is:
A. $ 2,000.
B. $ 6,500.
C. $ 8,500.
D. $21,500.
E. $36,500.
Question 36: Deltan Corp. allocates overhead to production on the basis of direct labor costs. Deltan's total estimated overhead is $450,000 and estimated direct labor is $180,000. Determine the amount of overhead to be allocated to finished goods inventory if there is $20,000 of total direct labor cost in the jobs in the finished goods inventory.
A. $ 8,000.
B. $20,000.
C. $70,000.
D. $50,000.
E. $90,000.
Question 37: A company has two departments, A and B, that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. A had a direct expense of $1,000 for deliveries. None of the $9,000 is a direct expense to Dept. B. The analysis also indicates that 60% of regular delivery requests originate in Dept. A and 40% in Dept. B.
The delivery expenses that should be charged to Dept. A and Dept. B, respectively, are:
A B
A) $4,500; $4,500
B) $5,800; $3,200
C) $5,500; $3,500
D) $5,500; $4,500
E) $5,400; $3,600
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
Question 38: General Chemical produced 10,000 gallons of Breon and 20,000 gallons of Baron. Joint costs incurred in producing the two products totaled $7,500. At the split-off point, Breon has a market value of $6.00 per gallon and Baron $2.00 per gallon. What portion of the joint costs should be allocated to Breon if the basis is market value at point of separation?
A. $2,500.
B. $3,000.
C. $4,500.
D. $5,625.
E. $1,500.
Question 39: Data pertaining to a company's joint production for the current period follows:
A B
Quantites produced 200 lbs. 100 lbs.
Processing cost after
Products are separated $1,100 $400
Market value at point
of separation $8/lb. $16/lb
What cost amount should be allocated to Product A for this period's $660 of joint costs on the basis of market value at the point of separation?
A. $330.00.
B. $440.00.
C. $220.00.
D. $194.12.
E. $484.00.
Question 40: A sawmill bought a shipment of logs for $40,000. When cut, the logs produced a million board feet of lumber in the following grades:
Type 1 - 400,000 bd. ft. priced to sell at $0.12 per bd. ft.
Type 2 - 400,000 bd. ft. priced to sell at $0.06 per bd. ft.
Type 3 - 200,000 bd. ft. priced to sell at $0.04 per bd. ft.
How much cost should be allocated to Type 1 and Type 2, respectively?
Type 1 Type 2
A) $16,000; $16,000
B) $13,333; $ 4,444
C) $40,000; $24,000
D) $24,000; $12,000
E) $24,000; $ 8,000
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
Question 41: A sawmill paid $70,000 for logs that produced 200,000 board feet of lumber in 3 different grades and amounts as follows:
Grade Production Market price
Structural.... 25,000 board feet $1,350/1,000 bd. ft.
No. 1 Common.. 75,000 board feet $ 750/1,000 bd. ft.
No. 2 common.. 100,000 board feet $ 300/1,000 bd. ft.
How much of the $70,000 joint cost should be allocated to No. 2 Common?
A. $ 0.
B. $17,500.
C. $23,333.
D. $35,000.
E. $70,000.
Question 42: A dairy allocates the cost of unprocessed milk to the production of milk, cream, butter and cheese. For the current period, unprocessed milk was purchased for $240,000, and the following quantities of product and sales revenues were produced.
Product Pounds Price per pound
Milk 100,000 $0.90
Cheese 50,000 2.20
Butter 20,000 1.00
Cream 10,000 3.00
How much of the $240,000 cost should be allocated to milk?
A. $ 0.
B. $ 86,400.
C. $ 90,000.
D. $133,333.
E. $240,000.
Question 43: Breon Beef Company uses the relative market value method of allocating joint costs in its production of beef products. Relevant information for the current period follows:
Product Production in Pounds Market Price/lb
Sirloin 3,000 $5.00
Hamburger 10,000 2.00
Rib eye 4,000 4.75
Roast 6,000 3.50
The total joint cost for the current period was $43,000. How much of this cost should Breon Beef allocate to sirloin?
A. $ 0.
B. $ 5,909.
C. $ 8,600.
D. $10,750.
E. $43,000.
Question 44: A retail store has three departments, 1, 2, and 3, and does general advertising that benefits all departments. Advertising expense totaled $50,000 for the year, and departmental sales were as follows:
Department 1 $110,000
Department 2 213,000
Department 3 151,000
How much advertising expense should be allocated to Department 2 if the allocation is based on departmental sales?
A. $11,000.
B. $14,000.
C. $16,667.
D. $22,500.
E. $50,000.
Question 45: Dresden, Inc., has four departments. Information about these departments follows:
Maintenance Cutting Assembly Packing
Direct costs $18,000 $30,000 $70,000 $45,000
Sq. ft. of space 500 1,000 2,000 3,000
No. of employees 2 3 16 4
If maintenance costs are allocated to the other departments based on floor space occupied by each, the amount of maintenance cost allocated to the Cutting Department is:
A. $ 2,769.
B. $ 3,000.
C. $ 3,724.
D. $ 6,000.
E. $18,000.
Question 46: Baker Corporation has two operating departments, Machining and Assembly, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period:
Office Expenses Total Allocation Basis
Salaries ........................$30,000 Number of employees
Depreciation ...................20,000 Cost of goods sold
Advertising .....................40,000 Net sales
Item Machining Assembly Total
Number of employees 1,000 1,500 2,500
Net sales $325,000 $475,000 $800,000
Cost of goods sold $75,000 $125,000 $200,000
The amount of the total office expenses that should be allocated to Assembly for the current period is:
A. $ 35,750.
B. $ 45,000.
C. $ 54,250.
D. $ 90,000.
E. $600,000.
Question 47: A company rents a building with a total of 100,000 square feet, which are evenly divided between two floors. The space on the first floor is considered twice as valuable as that on the second floor. The total monthly rent for the building is $30,000. How much of the monthly rental expense should be allocated to a department that occupies 10,000 square feet on the first floor?
A. $6,000.
B. $5,000.
C. $3,000.
D. $4,000.
E. $2,000.
Question 48: A company pays $15,000 per period to rent a small building that has 10,000 square feet of space. This cost is allocated to the company's three departments on the basis of the amount and value of the space occupied by each. Department One occupies 2,000 square feet of ground-floor space, Department Two occupies 3,000 square feet of ground-floor space, and Department Three occupies 5,000 square feet of second-floor space. If rents for comparable floor space in the neighborhood average $2.20 per square foot for ground-floor space and $1.10 per square foot for second-floor space and the rent is allocated based on the total value of the space, Department One should be charged rent expense for the period of:
A. $4,400.
B. $4,000.
C. $3,000.
D. $2,200.
E. $2,000.
Question 49: Calculate the percent increase or decrease for each of the following financial statement items:
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2010
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2009
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Cash........................................................
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$ 37,500
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$ 30,000
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Accounts receivable................................
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63,000
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52.500
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Inventory.................................................
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67,500
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90,000
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Accounts payable....................................
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35,100
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27,000
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Sales........................................................
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187,500
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150,000
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Equipment...............................................
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165,000
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125,000
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Question 50: Harv's HiFi Sound Systems produces speakers for movie theaters that sell for $1,200 each. Listed below are selected cost items for the production of 600 units.
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Cost by behavior
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Cost by function
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Variable
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Fixed
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Product
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Period
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Plastic for speaker casings........
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$150,000
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Assembly labor.........................
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200,000
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Factory property taxes..............
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22,000
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Accounting staff salaries...........
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75,000
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Sales office rent........................
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10,000
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Sales manager's salary
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60,000
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Depreciation on factory equipment.................................
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23,000
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Sales commissions....................
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36,000
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Classify each cost as either fixed or variable, and either a product or a period cost.
Question 51: The Johnson Manufacturing Company has the following job cost sheets on file. They represent jobs that have been worked on during March of the current year. This table summarizes information provided on each sheet:
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Number
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Total Cost Incurred
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Status of Job
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444
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$15,050
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Finished and delivered
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445
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$22,400
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Finished and delivered
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446
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$ 7,500
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Finished and unsold
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447
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$ 4,300
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Finished and delivered
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448
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$33,000
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Finished and unsold
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449
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$62,000
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Finished and unsold
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450
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$14,600
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Unfinished
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451
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S22,200
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Finished and delivered
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452
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S 3,600
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Unfinished
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453
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S 1,000
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Unfinished
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(a) What is the cost of goods sold for the month of March?
(b) What is the cost of the goods in process inventory on March 31?
(c) What is the cost of the finished goods inventory on March 31?
Question 52: Eclectic Furniture Company allocates its indirect salaries of $12,500 on the basis of sales. Determine the indirect salaries allocated to Departments 1 and 2 using the following information:
Dept. 1 Dept. 2 Combined
Revenues from sales $182,000 $78,000 $260,000
42,250 22,750 65,000