Question 1
30 Multiple-choice 3 pts. each Please highlight your answers in yellow. Thank you ? 1. Globe Company produces two products, A1 and B2. A1 is a high-volume item totaling 20,000 units annually. B2 is a low-volume item totaling only 6,000 units per year. A1 requires one hour of direct labor for completion, while each unit of B2 requires 2 hours. Therefore, total annual direct labor hours are 32,000 (20,000 + 12,000). Expected annual manufacturing overhead costs are $640,000. Globe uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of B2 would be assigned overhead of A) $20.00. B) $24.61. C) $40.00. D) need more information to compute. 2. R-Ball Corporation manufactures deluxe and standard racquetball racquets. R-Ball's total overhead costs consist of assembly costs and inspection costs. The following information is available: Cost Deluxe Standard Total Cost Assembly 500 mach. hours 500 mach. hours $30,000 Inspections 350 150 $50,000 2,100 labor hours 1,900 labor hours R-Ball is considering switching from one overhead rate based on labor hours to activity-based costing. Using activity-based costing, how much assembly cost is assigned to deluxe racquets? A) $10,500. B) $15,000. C) $15,750. D) $21,000. 3. Vinnie Morelli Corporation has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year. Activity Cost Pool Cost Driver Est. Overhead Cost Driver Activity Ordering and Receiving Orders $ 120,000 500 orders Machine Setup Setups 297,000 450 setups Machining Machine hours 1,500,000 125,000 MH Assembly Parts 1,200,000 1,000,000 parts Inspection Inspections 300,000 500 inspections If overhead is applied using activity-based costing, the overhead application rate for ordering and receiving is A) $1.20 per direct labor hour. B) $240 per order. C) $0.12 per part. D) $6,834 per order. 4. Companies that switch to ABC often find they have A) been overpricing some products. B) possibly losing market share to competitors. C) been sacrificing profitability by underpricing some products. D) all of the above. 5. A company incurs $1,350,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available: Department Expected use of Driver Cost Ordering and Receiving 2,000 $400,000 Mixing 50,000 500,000 Testing 1,500 450,000 Production information for Goo is as follows: Department Expected use of Driver Ordering and Receiving 400 Mixing 20,000 Testing 500 Compute the amount of overhead assigned to Goo. A) $337,500 B) $430,000 C) $527,382 D) $675,000 6. An important element of just-in-time processing is A) dependable suppliers who are willing to deliver on short notice. B) a specialized workforce. C) less emphasis on a quality control system. D) all of the above. 7. A cost which remains constant per unit at various levels of activity is a A) variable cost. B) fixed cost. C) mixed cost. D) manufacturing cost. 8. A fixed cost is a cost which A) varies in total with changes in the level of activity. B) remains constant per unit with changes in the level of activity. C) varies inversely in total with changes in the level of activity. D) remains constant in total with changes in the level of activity. 9. If the activity level increases 10%, total variable costs will A) remain the same. B) increase by more than 10%. C) decrease by less than 10%. D) increase 10%. 10. Changes in activity have a(n) _________ effect on fixed costs per unit. A) positive B) negative C) inverse D) neutral 11. Why is identification of a relevant range important? A) It is required under GAAP. B) Cost behavior outside of the relevant range is not linear, which distorts CVP analysis. C) It directly impacts the number of units of product a customer buys. D) It is a cost that is incurred by a company that must be accounted for. 12. Fontain, Inc. collected the following production data for the past month: Units Produced Total Cost 1,600 $22,000 1,300 19,000 1,500 22,500 1,100 16,500 If the high-low method is used, what is the monthly total cost equation? A) Total cost = $4,400 + $11/unit B) Total cost = $5,500 + $10/unit C) Total cost = $0 + $15/unit D) Total cost = $3,300 + $12/unit 13. At the high level of activity in November, 7,000 machine hours were run and power costs were $12,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $6,000. Using the high-low method, the estimated fixed cost element of power costs is A) $12,000. B) $6,000. C) $3,600. D) $8,400. 14. Wynne Company's high and low level of activity last year was 60,000 units of product produced in May and 20,000 units produced in November. Machine maintenance costs were $78,000 in May and $30,000 in November. Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 45,000 units. A) $67,500 B) $72,000 C) $58,500 D) $60,000 15. Clark Company produces flash drives for computers, which it sells for $20 each. Each flash drive costs $12 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $2 per unit for a total of $1,000 for the month. How much is the contribution margin ratio? A) 30%. B) 40%. C) 60%. D) 70%. 16. If a company had a contribution margin of $500,000 and a contribution margin ratio of 40%, total variable costs must have been A) $750,000. B) $300,000. C) $1,250,000. D) $200,000. 17. A company has contribution margin per unit of $45 and a contribution margin ratio of 40%. What is the unit selling price? A) $75.00. B) $112.50. C) $18.00. D) Cannot be determined. 18. Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase? A) $18,000. B) $28,000. C) $12,000. D) $6,000. 19. At the break-even point of 2,000 units, variable costs are $55,000, and fixed costs are $32,000. How much is the selling price per unit? A) $43.50. B) $11.50. C) $16.00. D) Not enough information 20. The break-even point is where A) total sales equal total variable costs. B) contribution margin equals total fixed costs. C) total variable costs equal total fixed costs. D) total sales equal total fixed costs. 21. Fallow-Hawke is a nonprofit organization that captures stray deer from residential communities. Fixed costs are $10,000. The variable cost of capturing each deer is $10.00 each. Fallow-Hawke is funded by a local philanthropy in the amount of $32,000 for 2008. How many deer can Fallow-Hawke capture during 2008? A) 2,200. B) 3,200. C) 4,200. D) 2,000. 22. Variable costs for Foley, Inc. are 25% of sales. Its selling price is $80 per unit. If Foley sells one unit more than break-even units, how much will profit increase? A) $60.00. B) $20.00. C) $26.66. D) $320.00. 23. A company requires $1,020,000 in sales to meet its net income target. Its contribution margin is 30%, and fixed costs are $180,000. What is the target net income? A) $306,000. B) $234,000. C) $420,000. D) $126,000. 24. Dodge Company produces flash drives for computers, which it sells for $20 each. Each flash drive costs $6 of variable costs to make. During March, 1,000 drives were sold. Fixed costs for March were $4.20 per unit for a total of $4,200 for the month. If variable costs decrease by 10%, what happens to the break-even level of units per month for Dodge Company? A) It is 10% higher than the original break-even point. B) It decreases about 12 units. C) It decreases about 30 units. D) It depends on the number of units the company expects to produce and sell. 25. For Bobby Company, sales is $1,000,000 (5,000 units), fixed expenses are $300,000, and the contribution margin per unit is $80. What is the margin of safety in dollars? A) $50,000 B) $250,000 C) $450,000 D) $700,000 26. Konerko Company sells two types of computer chips. The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus). Q-Chip has variable costs per unit of $30 and a selling price of $50. Q-Chip Plus has variable costs per unit of $35 and a selling price of $65. The weighted-average unit contribution margin for Konerko is: A) $23. B) $25. C) $27. D) $50. 27. Konerko Company sells two types of computer chips. The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus). Q-Chip has variable costs per unit of $30 and a selling price of $50. Q-Chip Plus has variable costs per unit of $35 and a selling price of $65. Konerko's fixed costs are $540,000. How many units of Q-Chip would be sold at the break-even point? A) 6,000 B) 7,043 C) 10,000 D) 14,000 28. Fields Corporation has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Fields incurs $2,220,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. What will sales be for the Sporting Goods Division at the break-even point? A) $1,800,000 B) $2,100,000 C) $3,355,814 D) $3,900,000 29. Dye Company can sell all the units it can produce of either Plain or Fancy but not both. Plain has a unit contribution margin of $96 and takes two machine hours to make and Fancy has a unit contribution margin of $120 and takes three machine hours to make. There are 2,400 machine hours available to manufacture a product. What should Dye do? A) Make Fancy which creates $24 more profit per unit than Plain does. B) Make Plain which creates $8 more profit per machine hour than Fancy does. C) Make Plain because more units can be made and sold than Fancy. D) The same total profits exist regardless of which product is made. 30. A cost structure which relies more heavily on fixed costs makes the company: A) more sensitive to changes in sales revenue. B) less sensitive to changes in sales revenue. C) either more or less sensitive to changes in sales revenue, depending on other factors. D) have a lower break-even point.
Question 3
Your company borrows $4,000,000 on a short term loan. Interest will be 5%, compounded monthly. They will repay the loan each month over the next 5 years. How much will the payments be? $75,485, $92,117, $810,028, $211,312, None of the above Retained earnings on the balance sheet represents (Net profits after taxes,Cash,Net profits after taxes minus preferred,dividends,The cumulative total of earnings reinvested in the firm) Your grandfather placed $5,000 in a trust fund for you. In 5 years, the fund will be worth $10,000. What is the rate of return on the trust fund, if interest is compounded monthly? 1.162%, 8%, .5%, 116% Which would give you the greatest future value? (Semiannual compounding, Monthly compounding, Quarterly Compounding, Daily Compounding) To pay for her college education, Gina is saving $4,000 each year for the next five years in a bank account paying 15 percent interest. How much will Gina have in that account at the end of 5th year? ($25,921.08, $26,970.53, $13,408.62, $14,068.92) Which of the following best describe capital markets? the name given to the most prominent and busiest exchanges located in a nation's capital city markets trading securities with maturities beyond one year markets trading commercial paper short term maturity markets, mostly trading T-Bills All of the following are examples of current assets EXCEPT Question 10 answers Accounts receivable Cash Accruals Inventory Discuss the various types of ratios and how managers might use them in evaluating their company's performance Discuss the difference between the voting rights, the rights to assets, and the rights to earnings between stockholders and bondholders.
Question 4
Equipment that cost $80,000 and has accumulated depreciation of $63,000 is exchanged for similar equipment with a fair value of $35,000 and $15,000 cash is received. The exchange lacked commercial substance. Directions (10 Points): Respond to these questions on a separate Excel spreadsheet as directed on the Problem Set 3 directions. a) Show the calculation of the gain to be recognized from the exchange. b) Prepare the entry for the exchange. Question 23 Presented below is information related to copyrights owned by Wamser Corporation at December 31, 2008. Cost $2,700,000 Carrying Amount $2,400,000 Expected Future Net Cash Flows $2,100,000 Fair Value $1,400,000 Assume Wamser will continue to use this asset in the future. As of December 31, 2008, the copyrights have a remaining useful life of 5 years. Directions (15 points): Respond to these questions on a separate Excel spreadsheet as directed on the Problem Set 3 directions. a) Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2008. b) Prepare the journal entry to record amortization expense for 2009. c) The fair value of the copyright at December 31, 2009 is $1,500,000. Prepare the journal entry (if any) necessary to record this increase in fair value. Question 24 Fehr Co. purchased a patent from Wells Co. for $180,000 on July 1, 2005. Expenditures of $51,000 for successful litigation in defense of the patent were paid on July 1, 2008. Fehr estimates that the useful life of the patent will be 20 years from the date of acquisition. Directions (5 points): Prepare a computation of the carrying value of the patent as of December 31, 2008 on a separate Excel spreadsheet as directed on the Problem Set 3 directions. Question 25 On January 1, 2008, Lowry Co. issued ten-year bonds with a face value of $1,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Directions (10 points): Prepare your responses on a separate Excel spreadsheet as directed on the Problem Set 3 directions. a. Calculate the issue price of the bonds. b. Without prejudice to your solution in part a, assume that the issue price was $884,000. Prepare the amortization table for 2008, assuming that amortization is recorded on interest payment dates. Answer: Question 26 James Equipment Company sells computers for $1,500 each and also gives each customer a 2-year warranty that requires the company to perform periodic services and to replace defective parts. During 2008, the company sold 700 computers. Based on past experience, the company has estimated the total 2-year warranty costs as $30 for parts and $60 for labor. In 2009, James incurred actual warranty costs relative to 2008 computer sales of $10,000 for parts and $18,000 for labor. a) Under the expense warranty treatment, give the entries to reflect the above transactions (accrual method) for 2008 and 2009. b) Under the cash basis method, what are the Warranty Expense balances for 2008 and 2009? Answer: A machine cost $500,000 on April 1, 2008. Its estimated salvage value is $50,000 and its expected life is eight years. Calculate the depreciation expense (to the nearest dollar) by each of the following methods, showing the figures used on a separate Excel spreadsheet as directed on the Problem Set 3 directions. a Straight-line for 2008 b Double-declining balance for 2009 c Sum-of-the-years'-digits for 2009
Question 5
It's an assignement about Risk and portfolio management. Basics of finance.,It's Page 101 ONLY : Question1 e) and Question2 Regards.,You have to do Question 1 e) and Question 2 of this attached file. Regards.,Ok thank you. If you need answers to question 1 a)b)c)d) to answer to question e). I can send it to you. Regards.,Hello, Your work looks good, thank you. However, I have some questions: -Question 2)b)In class, our teacher told us that stdev in this formula=> U(x) = E(r) - 1/2A(s?) equals 0, so automaticaly, U(x)=E(r)=Certainty equivalent=13.99%. I'm not sure if I understood the teacher clearly...so what do you think about that? -Question 2) c) In my course, I have this formula=> alpha(which represents the optimal proportion)= E(Rmkt)?rf/A(sigma?) Mathematicaly, your answer is right, but I don't understand why do you answer to this question thanks to one equation and not in using differenciation (derivative of alpha)... Can you briefly explain your answer? Regards.,I'm ok for the first part of your explanations. However, concerning the second part. If the formula given in my course (alpha=...etc) is correct, why when I use it to with your data, I find 11.45% and not your answer, which is 98.05% ? Thanks.,Hello, Ok, I'm going to compare my answer with those of my classmates and I'm going to decide after. Thanks for your working. Could I have your email, next time, I'll contact you directly without passing through this site... If you prefere of course. Regards.,Hello, So now, does the payment has been done? Or do I have to do something to pay you...,Perfect! thank you.
