20 Accounting Questions Set

1. The work-in process inventory account of
a manufacturing company shows a balance of $3,000 at the end of an accounting
period. The job-cost sheets of the two incomplete jobs show charges of $500 and
$300 for direct material, and charges of $400 and $600 for direct labor. From
this information, it appears that the company is using a predetermined overhead
rate of direct labor. What percentage is the rate?
2.
The break-even point in dollar sales for Rice Company is $480,000 and the
company contribution margin ratio is 40 percent. If Rice Company desires a
profit of $84,000, how much would sales have to total?

3.
Williams Company’s direct labor cost is 25 percent of its conversion cost. If
the manufacturing overhead for the last period was $45,000 and direct material
cost was $25,000, how much is the direct labor cost?

4.
Grading Company’s cash and cash equivalents consist of cash and marketable
securities. Last year the company’s cash account decreased by $16,000 and its
marketable securities account increased by $22,000, cash provided by operating
activities was $24,000. Net cash used for financing activities was $20,000.
Based on this information, was the net cash flow from investing activities on
the statement of cash flows a net increase or decrease? by how much?

5.
Gladstone Corporation’s flexible budget cost formula for supplies, a variable
cost is $2.82 per unit of output. The company’s flexible budget performance
report for last month showed an $8,140 unfavorable spending variance for
supplies. During that month, 21,250 units were produced. Budgeted activity for
the month had been 20,900 units. What is the actual cost per unit for indirect
material?

6. Lyons Company consist of two divisions A
and B. Lyons Company reported a contribution margin of $60,000 for division A,
and had a contribution margin ratio of 30 percent in division B, when sales on
division B were $240,000. Net operating income for the company was $22,000 and
traceable fixed expenses $45,000. How much were Lyons Company’s common fixed
expenses?

7. Atlantic Company produces a single product. For the most recent year, the
company’s net operating income computing by absorption costing method was
$7,800, and its net operating income computed by the variable costing method
was $10,500. The company’s unit product was $15 under variable costing and $24
under absorption costing. If the ending inventory consisted of 1,460 units, how
many units must have been in the beginning inventory?
8. Black Company uses the weighted-average
method in its process costing system. The company’s ending work-in-process
inventory consist 6,000 units, 75 percent complete with respect to materials
and 50 percent with respect to labor and overhead. If the total dollar value of
the inventory is $80,000 and the cost per equivalent unit for labor and
overhead is $6.00, what is the cost per equivalent unit for materials?

9. At Overland Company, maintenance cost is exclusively at variable cost that
varies directly with machine-hours. The Performance report for July showed that
actual maintenance cost totaled $11,315 and that the associated rate variance
was $146 unfavorable. If 7,300 machine hours were actually worked during July,
What is the budgeted maintenance cost per machine hour?

10. The cost of goods sold in a retail stored totaled $650,000. Fixed selling
and administrative expenses totaled $115,000 and variable selling and
administrative expenses were $420,000. If the store’s contribution margin
totaled $590,000, how much were the sales?

11. Denny Corporation is considering replacing a technologically obsolete machine
with a new state-of-the-art numerically controlled machine. The new machine
would cost$600,000 and would have a 10 year useful life. Unfortunately, the
machine would have no salvage value. The new machine would cost $20,000 per
year to operate and maintain, but would save $125,000 per year in labor and
other cost. The old machine can be sold now for a scrap for $50,000 what
percentage is the simple rate of return on the new machine rounded to the
nearest tenth of a percent? (Ignore the income taxes in this problem)

12. Lounsberry Inc. regularly uses material O55P and currently has in stock 375
liters of the material, for which it paid $2,700 several weeks ago. If this
were to be sold as is on the open market as surplus material, it would fetch
$6.35 per liter. New stock of the material can be purchased on the open market
for $7.20 per liter, but it must be purchased in lots of 1,000 liters. You been
asked to determine the relevant cost of 900 liters of the material to be used
in a job for a customer. What is the relevant cost of the 900 liters of
material O55P?
13. Harwichport Company has a current ratio
of 3.0 and
an acid-test ratio of 2.8. Current assets equal $210,000, of which $5,000
consists of prepaid expenses. The remainder of current assets consists of cash,
accounts receivable, marketable securities, and inventory. What is the amount
of Harwichport Company’s inventory?

14. Tolla Company is estimating the following sales for the first
six months of next year:

January $350,000 February $300,000 March $320,000 April $410,000
May $450,000 June $470,000

Sales at Tolla are normally collected as 70 percent in the month of sale, 25
percent in the month following the sale, and the remaining 5 percent being
uncollectible. Also, customers paying in the month of sale are given a 2
percent discount. Based on this information, how much cash should Tolla expect
to collect during the month of April?

15. Trauscht Corporation has provided the following data from its
activity-based costing system:

assembly: total cost $704,880 Total activity: 44,000 machine hours

Processing order: total cost: $91,428 total activity: 1,900 orders

Inspection: Total cost: $117,546. Total activity: 1,950
inspection-hrs.

The company makes 360 units of product P23F a year, requiring a total of 725
machine-hours, 85 orders, and 45 inspection-hours per year. The product’s
direct materials cost is $42.30 per unit and its direct labor cost is $14.55
per unit. The product sells for $132.10 per unit. According to the
activity-based costing system, what is the product margin for product P23F?

16. Williams Company’s direct labor cost is 30 percent of its
conversion cost. If the manufacturing overhead for the last period was $59,500
and the direct materials cost was $37,000, what is the direct labor cost?

17. In a recent period, 13,000 units were produced, and there was
a favorable labor efficiency variance of $23,000.
If 40,000 labor-hours were worked and the standard wage rate was $13 per
labor-hour, what would be the standard hours allowed per unit of output?

18. The balance in White Company’s work-in-process inventory
account was $15,000 on August 1 and $18,000 on August 31. The company incurred
$30,000 in direct labor cost during August and requisitioned $25,000 in raw
materials (all direct material). If the sum of the debits to the manufacturing
overhead account total $28,000 for the month, and if the sum of the credits
totaled $30,000, then was Finished Goods debited or credited? By how much?

19. A company provides the following data:

Sales 4,000 units. Sales price: $80 per unit. Variable cost: $50 per unit.
Fixed cost: $30,000

If the dollar contribution margin per unit is increased by 10
percent, total fixed cost is decreased by 15 percent, and all other factors
remain the same, will net operating income increase or decrease? By how much?

20. For the current year, Paxman Company incurred $175,000 in
actual manufacturing overhead cost. The manufacturing overhead account showed
that overhead was overapplied in the amount of $9,000 for the year. If the
predetermined overhead rate was $8.00 per direct labor-hour, how many hours
were worked during the year?