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Please answer all questions and show calculations: 2. Based on the following data, what is the amount of quick assets? Accounts payable $ 30,000 Accounts receivable 65,000 Accrued liabilities 7,000 Cash 20,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 36,000 Notes payable (short-term) 20,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 (Points: 4) $163,000 $195,000 $121,000 $56,000

65000+20000+36000 = 121000

3. Based on the following data for the current year, what is the number of days' sales in accounts receivable? Net sales on account during year $584,000 Cost of merchandise sold during year 300,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 Inventory, end of year 110,000 (Points: 4) 5.8 11.4 21.9 25

360/{584000/(45000+35000)/2}= 25 days

4.The following information pertains to Tanzi Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments $ 40,000 Accounts receivable (net) 30,000 Inventory 25,000 Property, plant and equipment 215,000 Total Assets $310,000 Liabilities and Stockholders? Equity Current liabilities $ 60,000 Long-term liabilities 95,000 Stockholders? equity-common 155,000 Total Liabilities and stockholders? equity $310,000 Income Statement Sales $ 90,000 Cost of goods sold 45,000 Gross margin 45,000 Operating expenses 20,000 Net income $ 25,000 Number of shares of common stock 6,000 Market price of common stock $20 What is the current ratio for this company? (Points: 4) 1.42% .78% 1.58% .67%

40000+30000+25000/60000= 1.58 .

5. The balance sheets at the end of each of the first two years of operations indicate the following: 2006 2005 Total current assets $600,000 $560,000 Total investments 60,000 40,000 Total property, plant, and equipment 900,000 700,000 Total current liabilities 150,000 80,000 Total long-term liabilities 350,000 250,000 Preferred 9% stock, $100 par 100,000 100,000 Common stock, $10 par 600,000 600,000 Paid-in capital in excess of par-common stock 60,000 60,000 Retained earnings 325,000 210,000 If net income is $115,000 and interest expense is $30,000 for 2006, and the market price is $30, what is the price-earnings ratio on common stock for 2006. (round to one decimal point)? (Points: 4) 17.0 12.1 12.4 15.9 15.

115000-9000/60000 = 1.77 then 30/1.77 = 17 is the PE ratio

All of the following are ways that managers use managerial information except _______. (Points: 4) to evaluate the company?s stock performance

16. The Collins Company forecasts that total overhead for the current year will be $12,000,000 and that total machine hours will be 200,000 hours. Year to date, the actual overhead is $8,000,000 and the actual machine hours are 100,000 hours. If the Collins Company uses a predetermined overhead rate based on machine hours for applying overhead, what is that overhead rate? (Points: 4) $80 per machine hour $120 per machine hour $40 per machine hour $60 per machine hour

12/.2 = $60 per machine hour

17. Putnam Manufacturers Inc. has estimated total factory overhead costs of $84,000 and 12,000 direct labor hours for the current fiscal year. If job number 117 incurred 1,500 direct labor hours, the work in process account will be debited and factory overhead will be credited for _10500______. (Points: 4) $10,500 $0; WIP is credited $84,000 $1,500

84000/12000 x 1500 = 10500

18. When job 711 was completed, direct materials totaled $4,000; direct labor, $4,600; and factory overhead, $2,400, respectively. Units produced totaled 1,000. Unit costs are _11______. (Points: 4) $11,000 $1,100 $110 $11

4000+4600+2400/1000 = $11

25. Scher Corporation sells product G for $150 per unit, the variable cost per unit is $105, the fixed costs are $720,000, and Scher is in the 25% corporate tax bracket. What are the sales (dollars) required to earn a net income (after tax) of $40,000? (Points: 4) $2,533,350 $2,577,777 $2,933,400 $2,400,000

40000/.75 = 53333 Operating income is needed before tax

53333+720000/CM ratio = 773333/.3 = $2577777

28. Assume that Crowley Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. The unit contribution margins for Products A and B are $20 and $45 respectively. Crowley has fixed costs of $350,000. The break-even point in units is _______. (Points: 4) 14,000 units 25,278 units 8,000 units 10,769 units

350000/.8 x 20+.2 x 45 = 350000/25 = 14000 units

29. Assume that Growley Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. The unit contribution margins for Products A and B are $30 and $60 respectively. Growley has fixed costs of $378,000. The break-even point in units is _______. (Points: 4) 8,000 units 6,300 units 12,600 units 10,500 units

378000/.8x 30+ .2 x 60 =10500 units

30. McCabe Manufacturing Co.'s static budget at 8,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $23,000. At 9,000 units of production, a flexible budget would show _______. (Points: 4) variable costs of $49,500 and $25,875 of fixed costs variable costs of $44,000 and $23,000 of fixed costs variable costs of $49,500 and $23,000 of fixed costs variable and fixed costs totaling $75,375

44000/8000 x 90000 = 49500 variable and 23000 fixed

31. McCabe Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $25,000. At 8,000 units of production, a flexible budget would show _______. (Points: 4) variable costs of $64,000 and $25,875 of fixed costs variable costs of $64,000 and $25,000 of fixed costs variable costs of $72,000 and $25,000 of fixed costs variable and fixed costs totaling $112,000

45000/5000 x 8000 = 72000 variable and 25000 fixed

32. Production and sales estimates for March for the Finneaty Co. are as follows: Estimated inventory (units), March 1 17,500 Desired inventory (unit), March 31 19,300 Expected sales volume (units): Area M 6,000 Area L 7,000 Area O 9,000 Unit sales price $15 The number of units expected to be manufactured in March is ________. (Points: 4) 22,000 1,800 23,800 20,200

22000+19300-17500 = 23800 units

35. Kidder Company began its operations on March 31 of the current year. Projected manufacturing costs for the first three months of business are $156,800, $195,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 of the estimated monthly manufacturing costs. Insurance was paid on March 31, and property taxes will be paid in November. Three-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month. The cash payments for manufacturing in the month of April are _______. (Points: 4) $128,000 $96,000 $156,800 $117,000

156800-28800/4 x 3 =$96000

36. The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are as follows: Standard Costs Direct materials 2,500 kilograms @ $8 Actual Costs Direct materials 2,600 kilograms @ $8.75 The amount of the direct materials quantity variance is _______. (Points: 4) $875 favorable $800 unfavorable $800 favorable $875 unfavorable

2500-2600 x 8 = $800 unfavorable

37. The following data is given for the Walker Company: Budgeted production 26,000 units Actual production 27,500 units Materials: Standard price per ounce $6.50 Standard ounces per completed unit 8 Actual ounces purchased and used in production 228,000 Actual price paid for materials $1,504,800 Labor: Standard hourly labor rate $22 per hour Standard hours allowed per completed unit 6.6 Actual labor hours worked 183,000 Actual total labor costs $4,020,000 Overhead: Actual and budgeted fixed overhead $1,029,600 Standard variable overhead rate $24.50 per standard labor hour Actual variable overhead costs $4,520,000 Overhead is applied on standard labor hours. The direct material price variance is _______. (Points: 4) 22,800U 22,800F 52,000U 52,000F

6.5- 1504800/228000 x 228000 = 22800 U

38. The following data relate to direct labor costs for the current period: Standard costs 9,000 hours at $5.50 Actual costs 8,750 hours at $5.75 What is the direct labor rate variance? (Points: 4) $2,250.00 unfavorable $2,187.50 unfavorable $1,438.00 favorable $1,375.00 favorable

5.5-5.75 x 8750= 2187.5 unfavorable

39. The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: Standard: 25,000 hours at $10 $250,000 Actual: Variable factory overhead 202,500 Fixed factory overhead 60,000 What is the amount of the factory overhead volume variance? (Points: 4) $12,500 favorable $10,000 unfavorable $12,500 unfavorable $10,000 favorable

25000-30000 x 2 = 10000 unfav.

40. The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: Actual: Variable factory overhead $360,000 Fixed factory overhead 104,000 Standard hours allowed for units produced: 60,000 hours at $7.50 450,000 What is the amount of the factory overhead volume variance? (Points: 4) $12,000 unfavorable $12,000 favorable $14,000 unfavorable $26,000 unfavorable

60000-80000 x 1.3 = 26000 unfavorable

41. At the end of the fiscal year, variances from standard costs are usually transferred to the ______. cost of goods sold

45. Espinosa Corporation had $220,000 in invested assets, sales of $242,000, income from operations amounting to $48,400, and a desired minimum rate of return of 3%. The rate of return on investment for Espinosa is _______. (Points: 4) 4% 22% 3% 6.4%

48400/220000 = 22%

46. Assume that Division P has achieved income from operations of $165,000 using $900,000 of invested assets. If management desires a minimum rate of return of 8%, the residual income is _______. (Points: 4) $72,000 $13,200 $185,000 $93,000

165000 - 900000 x .08 =$93000

47. The condensed income statement for a business for the past year is presented as follows: Product F G H Total Sales $300,000 $220,000 $340,000 $860,000 Less variable costs 180,000 190,000 220,000 590,000 Contribution margin $120,000 $ 30,000 $120,000 $270,000 Less fixed costs 50,000 50,000 40,000 140,000 Income (loss) from oper. $ 70,000 $ (20,000) $ 80,000 $130,000 Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G? (Points: 4) $20,000 increase $30,000 increase $20,000 decrease $30,000 decrease

220000-190000 = $30000 CM lost therefore decrease in net income by $30000

48. The condensed income statement for a business for the past year is as follows: Product T U Sales $600,000 $320,000 Less variable costs 540,000 220,000 Contribution margin $ 60,000 $100,000 Less fixed costs 145,000 40,000 Income (loss) from operations $ (85,000) $ 60,000 Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U. What is the amount of change in net income for the current year that will result from the discontinuance of Product T? (Points: 4) $60,000 increase $85,000 increase $85,000 decrease $60,000 decrease

Loss of CM - $60000 decrease in net income

49. A business is operating at 70% of capacity and is currently purchasing a part used in its manufacturing operations for $24 per unit. The unit cost for the business to make the part is $36, including fixed costs, and $28, not including fixed costs. If 15,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it? (Points: 4) $60,000 cost decrease $180,000 cost increase $60,000 cost increase $180,000 cost decrease

28-24 x 15000 = 60000 increase in cost if made in house.

50. Frank Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $5 a unit. The unit cost for Frank Co. to make the part is $6, which includes $.40 of fixed costs. If 4,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it? (Points: 4) $12,000 cost decrease $20,000 cost increase $20,000 cost decrease $2,400 cost increase

5.6-5 *4000 = $2400 increase

51. Dary Co. Produces a single product. Its normal selling price is $28 per unit. The variable costs are $18 per unit. Fixed costs are $20,000 for a normal production run of 5,000 units per month. Dary received a request for a special order that would not interfere with normal sales. The order was for 1,500 units and a special price of $17.50 per unit. Dary Co. has the capacity to handle the special order and, for this order, a variable selling cost of $2 per unit would be eliminated. If the order is accepted, what would be the impact on net income? (Points: 4) decrease of $750 decrease of $6,750 increase of $2,250 increase of $1,500

17.5-16 x 1500 = $2250 increase

52. Security Fire Alarm is currently buying 50,000 motherboards from MotherBoard?s Inc at a price of $65 per board. It was suggested at the last manager?s meeting that the company should consider making its own boards. The costs to make the part are as follows: Direct Materials $32 per unit, Direct labor $10 per unit, Variable Factory Overhead $16.00, Fixed Costs for the plant would increase by $75,000. As the financial advisor, what would you recommend? (Points: 4) Buy - $75,000 more in profits Make - $275,000 increase in profits Buy - $275,000 more in profits Make - $350,000 increase in profits

32+10+16+75000/50000 = 59.5 -65 x 50000 =275000 increase in profit to make inhouse

53. Elfrink Corporation uses the variable cost concept of product pricing. Below is cost information for the production and sale of 35,000 units of its sole product. Elfrink desires a profit equal to a 11.2% rate of return on invested assets of $350,000. Fixed factory overhead cost $105,000 Fixed selling and administrative costs 35,000 Variable direct materials cost per unit 4.34 Variable direct labor cost per unit 5.18 Variable factory overhead cost per unit .98 Variable selling and administrative cost per unit .70 The dollar amount of desired profit from the production and sale of the company's product is _______. (Points: 4) $89,600 $39,200 $70,000 $84,000

350000 x 11.2% = $39200

54. Soap Company manufactures Soap X and Soap Y and can sell all it can make of either. Based on the following data, which statement is true? X Y Sales Price $32 $40 Variable Cost 22 24 Hours needed to process 5 8 (Points: 4) X is more profitable than Y. Y is more profitable than X. Neither X nor Y have a positive contribution margin. X and Y are equally profitable.

X = 32-22 / 5 = 2 per hour

Y = 40-24/8 = 2 per hour

X and Y are equally profitable

55. Niva Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: 55; 78; and 32, respectively. The variable costs for each product are: 20; 50; and 15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 7 hours to process, Tales take 4 hours, and Wales take 1 hour. Which product has the highest contribution margin per machine hour? (Points: 4) Bales Tales Wales Bales and Tales have the same

Bales= 55—20/7 = $5

Tales= 78-50/4 = $7

Wales=32-15/1 = 17

Wales, Tales and Bales is the sequence to be preferred according to CM per hour.

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