Questions -
Q1. Conan Company has total fixed costs of $121,000. Its product sells for $45 per unit and variable costs amount to $27 per unit. Next year Conan Company wishes to earn a pretax income that equals 18% of fixed costs. How many units must be sold to achieve this target income level?
7,952.
15,864.
15,964.
7,932.
16,024.
none of the above
Q2. The Haskins Company manufactures and sells radios. Each radio sells for $24.45 and the variable cost per unit is $17.15. Haskin's total fixed costs are $28000, and budgeted sales are 8300 units. What is the contribution margin per unit?
$7.3.
$13.05.
$24.55.
$33000.
$36.05
Q3. A company's history indicates that 24% of its sales are for cash and the rest are on credit. Collections on credit sales are 30% in the month of the sale, 50% in the next month, and 15% the following month. Projected sales for January, February, and March are $57,000, $72,000 and $82,000, respectively. The March expected cash receipts from all current and prior credit sales rounded to the nearest dollar for each month is:
$55,404
$55,458
$52,554
$54,606
$39,558
none of the above
Q4. Bartels Corp. produces woodcarvings. It takes 4 hours of direct labor to produce a carving. Bartels' standard labor cost is $12 per hour. During August, Bartels produced 8,000 carvings and used 22,000 hours of direct labor at a total cost of $249,456. What is Bartels' labor rate variance for August?
$29,088 favorable.
$14,564 unfavorable.
$14,544 favorable.
$14394 favorable.
$14,544 unfavorable.
none of the above
Q5. The following company information is available:
Direct materials used for production 39,000 gallons
Standard quantity for units produced 33,600 gallons
Standard cost per gallon of direct material $4.45
Actual cost per gallon of direct material $4.95
The direct materials quantity variance is:
$26,730 unfavorable.
$25,030 unfavorable.
$24,030 unfavorable.
$23,530 favorable.
$23,430 favorable.
none of the above
Q6. A company has determined that its standard costs to produce a single unit of output is as follows:
Direct materials 6 pounds at $0.94 per pound = $5.64
Direct labor 0.5 hour at $14.51 per hour = $7.25
Manufacturing overhead 0.5 hour at $4.80 per hour = $2.40/unit;
$1.40/unit variable;
$1.00/unit fixed.
Also note:
Normal Production 10,500 units
During the latest month, the company purchased and used 58,600 pounds of direct materials at a price of $1.09 per pound to produce 10,025 units of output.
Direct labor costs for the month totaled $66,100 based on 4,900 direct labor hours worked.
Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400.
Based on this information, the factory overhead volume variance was:
$475 favorable
$475 unfavorable
$865 unfavorable
$1,880 favorable
$6,910 favorable
none of the above
Q7. Patrick Corporation inadvertently produced 10,000 defective personal radios. The radios cost $11 each to produce. A salvage company will purchase the defective units as they are for $6 each. Patrick's production manager reports that the defects can be corrected for $5 per unit, enabling them to be sold at their regular market price of $15.5. Patrick should:
Sell the radios for $6 per unit.
Correct the defects and sell the radios at the regular price.
Sell the radios as they are because repairing them will cause their total cost to exceed their selling price.
Sell 5,000 radios to the salvage company and repair the remainder.
Throw the radios away.
none of the above
Q8. A company is considering purchasing a machine for $20,000. The machine will generate an pre-tax net income of $2,400 per year. Annual depreciation expense would be $1,300. What is the payback period for the new machine? (Round your answer to the nearest whole number; disregard tax effect.)
17 years.
8 years.
5 years.
15 years.
18 years.
none of the above
Q9. A company is planning to purchase a machine that will cost $28,000, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's output of 3,150 units evenly throughout each year. A projected income statement for each year of the asset's life appears below.
|
Sales
|
|
$90,500
|
|
Costs:
|
|
|
|
Manufacturing
|
$53,000
|
|
|
Depreciation on machine
|
4,667
|
|
|
Selling and administrative expenses
|
30,500
|
(88,167)
|
|
Income before taxes
|
|
$2333
|
|
Income tax (50%)
|
|
(1,167)
|
|
Net income
|
|
$1,166
|
What is the accounting rate of return for this machine?
16.7%.
8.3%.
4.2%.
22.5%.
41.7%.
none of the above