Use the following sales budget information to answer question 1:
July $100,000
August $80,000
September $110,000
October $90,000
November $100,000
December $94,000
Historically, cash collection of sales has been:
65% of sales collected in month of sale
25% of sales collected in month following sale
10% of sales collected in second month following sale
1. What are the expected cash collections in September?
A. $86,000
B. $97,100
C. $98,500
D. $101,500
Use the following information to answer question 2:
Caps, Inc. has the following budget for the production and sale of 1,000 caps:
Sales revenue $8,500
Cost of goods sold $5,000
Fixed expenses $2,500
Income $1,000
2. If 900 caps were sold, what would budgeted sales revenue be?
A. $900 C. $8,500
B. $7,650 D. $9,250
Use the following unit cost information to answer question 3:
Direct materials $2.50
Direct labor $4.50
Variable overhead $2.00
Fixed overhead $0.80
3. If the product is sold in the external market at full cost plus a 25% markup, and all production can be sold, what is the appropriate transfer price?
A. $9.00
B. $9.80
C. $11.25
D. $12.25
4. Lucky Duck, Inc. had sales of $550,000 and net operating income of $275,000. Beginning of the year operating assets were $125,000 and end of the year operating assets were $175,000. What asset figure is used to compute the return on investment?
A. $125,000
B. $150,000
C. $175,000
D. $200,000
Use the following information to answer question 5:
Warranty claims-$120, 000
Product liability lawsuits-$200,000
Rework costs-$600,000
Quality training-$350,000
Inspection of incoming materials-$900,000
Total yearly sales-$50,000,000
5. What are total internal failure costs?
A. $320,000 C. $600,000
B. $350,000 D. $900,000
Use the following purchases budget information to answer question 6:
July $100,000 October $90,000
August $80,000 November $100,000
September $110,000 December $94,000
Historically, one half is paid at the time of purchase and the remainder in the month following purchase.
6. What are the expected cash disbursements in August?
A. $80,000 C. $95,000
B. $90,000 D. $100,000
7. Which of the following is a drawback of return on investment (ROI)?
A. Accounts receivable and inventory figures are generally difficult to measure.
B. ROI ignores the book value of assets.
C. ROI may discourage managers from replacing old assets like manufacturing equipment.
D. Use of different depreciation methods doesn't affect the ROI calculation.
8. If standard direct labor costs for the production of one unit are 2 hours @ $15 per hour, and actual direct labor costs for the production of 1,000 units are 1,950 hours @ $15.25 per hour, what is the labor rate variance?
A. $500 F
B. $500 U
C. $487.50 F
D. $487.50 U
Use the following sales forecast information to answer question 9:
January 15,000 cars
February 12,000 cars
March 16,000 cars
April 15,000 cars
9. Each car requires four wheels, and 30 minutes of labor time at a rate of $12 per hour. January's beginning balance of wheels is 6,000. What is the direct labor budget for March?
A. 96,000
B. 187,200
C. 192,000
D. 202,500
Use the following product unit costs to answer question 10:
Direct materials-$0.75
Direct labor-$1.00
Variable overhead-$0.50
Fixed overhead-$0.75
10. If the product can be sold to an external purchaser for full cost plus a 20% markup, what is the minimum transfer price, assuming no contribution margin loss on outside sales exists?
A. $1.75 C. $3.00
B. $2.25 D. $3.60
11. Nickerson, Inc. has developed a variable-overhead rate of $10 per machine hour and estimates fixed overhead at $250,000 for production up to 100,000 units per year. If the production manager estimates 9,000 machine hours for the production of 90,000 units next year, what are estimated variable-overhead costs?
A. $90,000
B. $250,000
C. $340,000
D. $900,000
Use the following production time estimates to answer questions 12 and 13:
Wait time-10 hours
Inspection time-1 hour
Processing time-36 hours
Move time-1.5 hours
12. What is the manufacturing cycle time?
A. 36 hours C. 47 hours
B. 46 hours D. 48.5 hours
13. What is manufacturing cycle efficiency? (Round your answer to the nearest percent.)
A. M% C. M%
B. 79% D. 86%
Correct answer will be 74% ( Efficiency = 36/(10+1+36+1.5) = 74.22% = 74%)
Use the following segment information to prepare an income statement using the contribution format and answer question 14:
Sales Revenue-$350,000
Variable Costs:
Production-$175,000
Selling, General, & Administrative-$75,000
Traceable Fixed Costs:
Production-$50,000
Selling, General, & Administrative-$32,500
Operating Assets-beginning of the year-$40,000
Operating Assets-end of the year-$44,000
14. What is the segment's return on investment? (Round your answer to two decimals.)
A. 39.77% C. 119.05%
B. 41.67% D. 227.27%
Use the following information to answer question 15:
Units started into production-1,200,000
Total good units completed-1, 115,000
Total hours of value-added production time-575,000
Total production hours-750,000
15. What is the throughput per hour? (Round your answer to two decimals.)
A. 1.49
B. 1.60
C. 1.94
D. 2.09
16. Actual variable-overhead expenses were $33,750 for production of 6,000 units. Variable overhead is applied at a rate of $3.00 per direct labor hour, two direct labor hours are budgeted for each unit, and 11,990 direct labor hours were incurred. What is the total variable-overhead variance?
A. $2,250 F
B. $2,250 U
C. $2,220 F
D. $2,220 U
Use the following sales forecast information to answer question 17:
January 15,000 cars
February 12,000 cars
March 16,000 cars
17. Each car requires four wheels, and requires 30 minutes of labor time at a rate of $12 per hour. January's beginning balance of wheels is 6,000. If the company tries to maintain 10% of the next month's forecasted production needs in inventory, what are the projected wheel purchases for February?
A. 12,000
B. 13,600
C. 49,600
D. 72,300
Use the following monthly data regarding each division within a company to answer questions 18 and 19:
Division A Division B Division C
Revenues $15,000 $15,000 $20,000
Variable Costs $12,000 $10,000 $8,000
Contribution Margin $3,000 $5,000 $12,000
Traceable Fixed Costs $2,000 $2,000 $8,000
Common fixed costs of $6,000 are divided equally among divisions.
18. What is the company's monthly net income?
A. $12,000
B. $8,000
C. $6,000
D. $2,000
19. What is the monthly net income for Division A?
A. $2,000
B. $1,000
C. ($4,000)
D. ($1,000)
Use the following information to answer questions 20 and 21:
Tie One On budgeted for production and sales of 12,000 silk ties, but actually produced 11,000 and sold 10,500. Each tie has the following standards: 1 foot of material at a budgeted cost of $1.50 per foot and 20 minutes of sewing time at a cost of $0.25 per minute. The ties sell for $8. Actual material costs for the production of 11,000 ties were $1.54 per foot. Actual total sewing time was 242,000 minutes and labor costs were $0.24 per minute.
20. What was the budgeted contribution margin per tie?
A. $1.18 C. $1.46
B. $1.22 D. $1.50
21. What was the actual contribution margin per tie?
A. $1.18 C. $1.46
B. $1.22 D. $1.50
Use the following sales forecast information to answer question 22:
January 15,000 bags
February 12,000 bags
March 16,000 bags
22. If the company maintains 10% of the next month's forecasted sales in inventory, what is the projected production for January?
A. 14,700
B. 15,000
C. 16,200
D. 17,500
Use the following information to answer questions 23 and 24:
Budgeted production and sales-5,000
Actual production and sales-6,000 units
Direct material standards-1.5 pounds of material @ $1.52 per pound
Direct labor standards-2 hours of assembly time @ $12.50 per hour Sales price-Sales price -$32
Actual direct material costs -8,600 @ $1.50 per pound
Actual direct labor costs-13,200 hours @ $12.25 per hour
23. What is the flexible budget variance?
A. $9,100 F
B. $9,100 U
C. $10,920 F
D. $10,920 U
24. What is the sales volume variance?
A. $6,000
B. $5,000
C. $4,720
D. $2,900
25. Tea Leaves, Inc. has a policy of maintaining 20% of the next year's expected sales in the ending inventory of any year. During 20x4, they budgeted and sold 120,000 tea bags. Sales of 125,000 tea bags are budgeted for 20x5. How many bags were purchased during 20x4?
A. 120,000
B. 121,000
C. 125,000
D. 145,000
Accounting MCQ Set-2
