1. A company’s average operating assets are $220,000, and itsnet operating income is $44,000. The company invested in a newproject, increasing average assets to $250,000 and increasing itsnet operating income to $49,550. What is the project’s residualincome if the required rate of return is 20%?
a)600.00, b) (450.00), c)450 d) (600)
2. Lyons Company consists of two divisions, A and B. Lyons Companyreported a contribution margin of $50,000 for Division A and had acontribution margin ratio of 30% in Division B, when sales inDivision B were $200,000. Net operating income for the company was$25,000, and traceable fixed expenses were $40,000. Lyons Company’scommon fixed expenses were
a)85,000 b)45000 c)40000 . d)70000
3. Werber Clinic uses client visits as its measure of activity.During January, the clinic budgeted for 2,700 client visits, butits actual level of activity was 2,730 client visits. The clinichas provided the following data concerning the formulas used in itsbudgeting and its actual results for January:
Data used in budgeting:
Fixed element Variable element
per month per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results
for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
13529
The activity variance for net operating income in January would beclosest to
a)2019 U b)489 U c)2019F d)489F
4. Cole Laboratories makes and sells a lawn fertilizer calledFastgro. The company has developed standard costs for one bag ofFastgro as follows:
Standard Standard Cost
Quantity per bag
Direct material 20 pounds $8.00
Direct labor 0.1 hours $1.10
Variable overhead 0.1 hours $0.40
The company had no beginning inventories of any kind on January 1.Variable overhead is applied to production on the basis of standarddirect-labor hours. During January, the company recorded thefollowing activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of$32,300
• Direct-labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on January 31: 3,000 pounds
The labor efficiency variance for January is
a)475F b)110 F c)350U d)130U
6.
Cole Laboratories makes and sells a lawn fertilizer called Fastgro.The company has developed standard costs for one bag of Fastgro asfollows:
Standard Standard Cost
Quantity per bag
Direct material 20 pounds $8.00
Direct labor 0.1 hours $1.10
Variable overhead 0.1 hours $0.40
The company had no beginning inventories of any kind on January 1.Variable overhead is applied to production on the basis of standarddirect-labor hours. During January, the company recorded thefollowing activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of$32,300
• Direct-labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on January 31: 3,000 pounds
The materials price variance for January is
a)1300U
b)1640U
c)1700F
d)1640F
7. Moorhouse Clinic uses client visits as its measure of activity.During December, the clinic budgeted for 3,700 client visits, butits actual level of activity was 3,690 client visits. The clinichas provided the following data concerning the formulas used in itsbudgeting and its actual results for December:
Data used in budgeting:
Fixed element Variable element
per month per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results
for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
The spending variance for medical supplies in December would beclosest to
a)680F
b)725F
c)725U
d)680U
8. Super Drive is a computer hard-drive manufacturer. The company’sbalance sheet for the fiscal year ended on November 30 appearsbelow:
Super Drive, Inc.
Statement of Financial Position
For the year ended November 30
Assets:
Cash $52,000
Accounts receivable 150,000
Inventory 315,000
Property, plant, and equipment 1,000,000
Total Assets $1,517,000
Liabilities and stockholders’ equity:
Accounts payable $175,000
Common stock 900,000
Retained earnings 442,000
Total liabilities and
stockholders’ equity $1,517,000
Additional information regarding Super Drive’s operations appearsbelow:
• Sales are budgeted at $520,000 for December and $500,000 forJanuary.
• Collections are expected to be 60% in the month of sale and 40%in the month following sale. There are no bad debts.
• 80% of the disk-drive components are purchased in the month priorto the month of the sale, and 20% are purchased in the month of thesale. Purchased components comprise 40% of the cost of goodssold.
• Payment for components purchased is made in the month followingthe purchase.
• Assume that the cost of goods sold is 80% of sales.
The budgeted cash collections for the upcoming December shouldbe
a)520,000
b)462,000
c)402,000
d)208,000
9.
Manufacturing Cycle Efficiency (MCE) is computed as
a) Value-Added Time divided by Throughput Time
b) Process Time divided by Delivery Cycle Time
c) Throughput Time divided by Delivery Cycle Time
d) Value-Added Time divided by Delivery Cycle Time.
10.
Vandall Corporation manufactures and sells a single product. Thecompany uses units as the measure of activity in its budgets andperformance reports. During April, the company budgeted for 7,300units, but its actual level of activity was 7,340 units. Thecompany has provided the following data concerning the formulasused in its budgeting and its actual results for April:
Data used in budgeting:
Fixed element Variable element
per month per unit
Revenue ___-___ $35.40
Direct labor 0 $3.30
Direct materials 0 15.90
Manufacturing overhead 49,200 1.20
Selling and
administrative expenses 26,600 0.10
Total expenses $75,800 $20.50
Actual results
for April:
Revenue $254,146
Direct labor $24,722
Direct materials $116,496
Manufacturing overhead $59,608
Selling and
administrative expenses $26,494
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