18.

 Equivalent units for a process costing system using the weighted-average method would be
equal to: 
A. units completed during the period and transferred out.
B. units started and completed during the period plus equivalent units in the ending work in
process inventory.
C. units completed during the period less equivalent units in the beginning inventory, plus
equivalent units in the ending work in process inventory.
D. units completed during the period plus equivalent units in the ending work in process
inventory.

21. The Assembly Department started the month with 14,000 units in its beginning work in
process inventory. An additional 296,000 units were transferred in from the prior department
during the month to begin processing in the Assembly Department. There were 14,000 units in
the ending work in process inventory of the Assembly Department.
How many units were transferred to the next processing department during the month? 
A. 293,000
B. 310,000
C. 324,000
D. 296,000

22. Diston Company uses the weighted-average method in its process costing system. The first
processing department, the Welding Department, started the month with 18,000 units in its
beginning work in process inventory that were 30% complete with respect to conversion costs.
The conversion cost in this beginning work in process inventory was $44,820. An additional
90,000 units were started into production during the month. There were 21,000 units in the
ending work in process inventory of the Welding Department that were 10% complete with
respect to conversion costs. A total of $677,970 in conversion costs were incurred in the
department during the month.
What would be the cost per equivalent unit for conversion costs for the month? (Round off to
three decimal places.) 
A. $8.112
B. $8.300
C. $7.533
D. $6.108
24. The following information pertains to Yap Company's Grinding Department for the month of
April:

   

All materials are added at the beginning of the process. Using the weighted-average method, the
cost per equivalent unit for materials is closest to: 
A. $0.59
B. $0.55
C. $0.45
D. $0.43

25. Hardouin Company uses the weighted-average method in its process costing system. The first
processing department, the Welding Department, started the month with 22,000 units in its
beginning work in process inventory that were 20% complete with respect to conversion costs.
The conversion cost in this beginning work in process inventory was $23,320. An additional
97,000 units were started into production during the month and 101,000 units were completed in
the Welding Department and transferred to the next processing department. There were 18,000
units in the ending work in process inventory of the Welding Department that were 40%
complete with respect to conversion costs. A total of $529,380 in conversion costs were incurred
in the department during the month.
What would be the cost per equivalent unit for conversion costs for the month? (Round off to
three decimal places.) 
A. $5.300
B. $5.458
C. $4.603
D. $5.108
26. Parmentier Company uses the weighted-average method in its process costing system. The
Molding Department is the second department in its production process. The data below
summarize the department's operations in January.

The accounting records indicate that the conversion cost that had been assigned to beginning
work in process inventory was $5,096 and a total of $87,668 in conversion costs were incurred in
the department during January.
What was the cost per equivalent unit for conversion costs for January in the Molding
Department? (Round off to three decimal places.) 
A. $1.654
B.$1.752
C. $1.490
D. $1.499

29. Borwan Company uses the weighted-average method in its process costing system. The
Assembly Department started the month with 8,000 units in its beginning work in process
inventory that were 70% complete with respect to conversion costs. An additional 69,000 units
were transferred in from the prior department during the month to begin processing in the
Assembly Department. There were 5,000 units in the ending work in process inventory of the
Assembly Department that were 20% complete with respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for the month? 
A. 67,400
B. 73,000
C. 72,000
D. 66,000
31. Fayard Corporation uses the weighted-average method in its process costing system. The
Assembly Department started the month with 5,000 units in its beginning work in process
inventory that were 70% complete with respect to conversion costs. An additional 67,000 units
were transferred in from the prior department during the month to begin processing in the
Assembly Department. During the month 63,000 units were completed in the Assembly
Department and transferred to the next processing department. There were 9,000 units in the
ending work in process inventory of the Assembly Department that were 50% complete with
respect to conversion costs.
What were the equivalent units for conversion costs in the Assembly Department for the month? 
A. 71,000
B. 64,000
C. 63,000
D. 67,500

33. Sanchez Corporation uses the weighted-average method in its process costing system. The
Fitting Department is the second department in its production process. The data below summarize
the department's operations in March.

  

The Fitting Department's cost per equivalent unit for conversion cost for March was $8.66.
How much conversion cost was assigned to the units transferred out of the Fitting Department
during March? 
A. $480,630
B. $450,320
C. $444,258
D. $510,940

33. James Company has a margin of safety percentage of 20% based on its actual sales. The
break-even point is $200,000 and the variable expenses are 45% of sales. Given this information,
the actual profit is: 
A. $27,500
B. $18,000
C. $22,500
D. $22,000
35. Butteco Corporation has provided the following cost data for last year when 100,000 units
were produced and sold:

   

All costs are variable except for $100,000 of manufacturing overhead and $100,000 of selling
and administrative expense. There are no beginning or ending inventories. If the selling price is
$10 per unit, the net operating income from producing and selling 110,000 units would be: 
A. $450,000
B. $385,000
C. $405,000
D. $560,000

41. Gaudy Inc. produces and sells a single product. The company has provided its contribution
format income statement for May.

   

If the company sells 4,300 units, its net operating income should be closest to: 
A. $7,700
B. $25,513
C. $26,700
D. $19,500

43. The contribution margin ratio is 30% for the Honeyville Company and the break-even point
in sales is $150,000. If the company's target net operating income is $60,000, sales would have to
be: 
A. $200,000
B.$350,000
C. $250,000
D. $210,000
48. Turner Company's contribution margin ratio is 15%. If the degree of operating leverage is 12
at the $150,000 sales level, net operating income at the $150,000 sales level must equal: 
A. $1,500
B. $2,700
C. $2,160
D. $1,875

51. Cindy, Inc. sells a product for $10 per unit. The variable expenses are $6 per unit, and the
fixed expenses total $35,000 per period. By how much will net operating income change if sales
are expected to increase by $40,000? 
A. $16,000 increase
B. $5,000 increase
C. $24,000 increase
D. $11,000 decrease
26. Zee Corporation has provided the following data concerning its overhead costs for the coming
year:

   

The company has an activity-based costing system with the following three activity cost pools
and estimated activity for the coming year:

   

The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of
idle capacity and organization-sustaining costs.
The distribution of resource consumption across activity cost pools is given below:

   

The activity rate for the Assembly activity cost pool is closest to: 
A. $2.70 per labor-hour
B. $4.25 per labor-hour
C. $4.05 per labor-hour
D. $8.10 per labor-hour
27. Tadlock Corporation has provided the following data concerning its overhead costs for the
coming year:

   

The company has an activity-based costing system with the following three activity cost pools
and estimated activity for the coming year:

   

The Other activity cost pool does not have a measure of activity; it is used to accumulate costs of
idle capacity and organization-sustaining costs.
The distribution of resource consumption across activity cost pools is given below:

   

The activity rate for the Order Processing activity cost pool is closest to: 
A. $420 per order
B. $520 per order
C. $490 per order
D. $780 per order
32. Madson Corporation uses an activity-based costing system with three activity cost pools. The
company has provided the following data concerning its costs:

   

The distribution of resource consumption across the three activity cost pools is given below:

   

How much cost, in total, would be allocated in the first-stage allocation to the Order Processing
activity cost pool? 
A. $418,000
B. $357,000
C. $304,000
D. $266,000
38. Petitte Corporation has provided the following data from its activity-based costing system:

   

Data concerning the company's product K54A appear below:

   

According to the activity-based costing system, the average cost of product K54A is closest to: 
A. $112.64 per unit
B. $114.99 per unit
C. $116.98 per unit
D. $76.91 per unit

43. Wecker Corporation uses the following activity rates from its activity-based costing to assign
overhead costs to products:

   

Data concerning two products appear below:

   

How much overhead cost would be assigned to Product V09X using the activity-based costing
system? 
A. $157.87
B. $91,722.47
C. $10,385.22
D. $5,485.50
14. Which of the following represents the correct order in which the indicated budget documents
for a manufacturing company would be prepared? 
A. Sales budget, cash budget, direct materials budget, direct labor budget
B. Production budget, sales budget, direct materials budget, direct labor budget
C. Sales budget, cash budget, production budget, direct materials budget
D. Selling and administrative expense budget, cash budget, budgeted income statement, budgeted
balance sheet

15. National Telephone company has been forced by competition to put much more emphasis on
planning and controlling its costs. Accordingly, the company's controller has suggested initiating
a formal budgeting process. Which of the following steps will NOT help the company gain
maximum acceptance by employees of the proposed budgeting system? 
A.  Implementing the change quickly.
B. Including in departmental responsibility reports only those items that are under the department
manager's control.
C. Demonstrating top management support for the budgeting program.
D. Ensuring that favorable deviations of actual results from the budget, as well as unfavorable
deviations, are discussed with the responsible managers.

16. A continuous (or perpetual) budget: 

A. is prepared for a range of activity so that the budget can be adjusted for changes in activity.
B. is a plan that is updated monthly or quarterly, dropping one period and adding another.
C. is a strategic plan that does not change.
D. is used in companies that experience no change in sales.

18. Budgeted production in units are determined by: 

A.  adding budgeted sales in units to the desired ending inventory in units and deducting the
beginning inventory in units from this total.
B. adding budgeted sales in units to the beginning inventory in units and deducting the desired
ending inventory in units from this total.
C. adding budgeted sales in units to the desired ending inventory in units.
D. deducting the beginning inventory in units from budgeted sales in units.

19. The budgeted amount of raw materials to be purchased is determined by: 

A. adding the desired ending inventory of raw materials to the raw materials needed to meet the
production schedule.
B. subtracting the beginning inventory of raw materials from the raw materials needed to meet
the production schedule.
C. adding the desired ending inventory of raw materials to the raw materials needed to meet the
production schedule and subtracting the beginning inventory of raw materials.
D. adding the beginning inventory of raw materials to the raw materials needed to meet the
production schedule and subtracting the desired ending inventory of raw materials.
23. A company's current ratio and acid-test ratios are both greater than 1. Issuing bonds to finance
purchase of an office building with the first installment of the bonds due in the current year
would: 
A. decrease net working capital.
B. decrease the current ratio.
C. decrease the acid-test ratio.
D. affect all of the above as indicated.

28. Higgins Company presently has a current ratio of 0.6. It is currently negotiating a loan, but it
has been informed it must improve its current ratio before the loan will be approved. Which of
the following actions would improve its current ratio? 
A. Pay off a portion of its long-term debt.
B. Use cash to pay off some current liabilities.
C. Purchase additional inventory on credit.
D. Collect some of the current accounts receivable.

29. The ratio of cash, trade receivables, and marketable securities to current liabilities is: 
A. the working capital of a company.
B. the acid-test ratio.
C. the current ratio.
D. the debt to equity ratio.

33. Ozols Corporation's most recent income statement appears below:

  The gross margin percentage is closest to: 

A. 33.2%
B. 55.7%
C. 300.8%
D. 125.6%

37. Archer Company had net income of $40,000 last year. The company has 5,000 shares of
common stock and 2,500 shares of preferred stock outstanding. There was no change in the
number of common or preferred shares outstanding during the year. Preferred dividends were $2
per share. The earnings per share of common stock was: 
A. $7.00
B. $8.00
C. $5.33
D. $7.50