A200 Practice Exam 3 Ch 4 10 11 12 Version A 100 Points possible Student Name Last 4 digits of ID Number Class Section Number Instructor s Name 1 Most business decisions focus on a narrow range of activity called the a b c d optimal range of production tactical operating range of production relevant range of production strategic range of production The following applies to questions 2 and 3 Behn Corporation uses the total cost concept of cost plus product pricing Below is cost information for the production and sale of 50 000 units of its single product Behn s owners want a profit equal to a 15 rate of return on invested assets of 650 000 Fixed factory overhead cost Fixed selling and administrative costs Variable direct materials cost per unit Variable direct labor cost per unit Variable factory overhead cost per unit Variable selling and administrative cost per unit 280 000 70 000 4 90 6 50 2 75 2 10 2 Behn s investors desire a total profit of a 50 000 b 297 500 c 650 000 d 97 500 3 The selling price for Behn s product is a 25 20 per unit b 16 25 per unit c 23 25 per unit d 19 75 per unit 4 Fuller Corporation is a merchandiser in the consumer goods industry Fuller s gross profit percentage in 2008 is 44 If the industry s average gross profit percentage is 40 what can we say about Fuller Corporation at the gross profit level a b c d it had more receivables than the average company in the industry it was more profitable than the average company in the industry it incurred more expenses than the average company in the industry it was less profitable than the average company in the industry 5 Winger Corporation overapplied factory overhead costs to work in process by 400 Which of the following will Winger record to correct this error a A 400 increase to work in process b A 400 increase to cost of goods sold c A 400 decrease to cost of goods sold d A 400 decrease to factory overhead e Both b and d 6 Harris Company s sales are 950 000 Its variable costs are 62 of sales and operating income is 48 000 What is Harris total fixed cost a 589 000 b 361 000 c 380 000 d 313 000 The following applies to questions 7 10 Hughes Inc manufactures personal security items For July 2008 the first month of operations it reports Sales Work in process inventory end of month Gross profit Indirect labor Indirect materials Other factory overhead Materials purchased Total manufacturing costs Materials inventory end of month 610 000 15 000 200 000 18 000 35 000 12 000 285 000 465 000 25 000 Hughes had no over applied or under applied factory overhead in July 7 What was Hughes direct materials cost for the month a 175 000 b 35 000 c 225 000 d 260 000 8 What was Hughes direct labor cost for the month a 175 000 b 465 000 c 18 000 d 225 000 9 What was Hughes cost of goods sold expense for the month a 450 000 b 465 000 c 480 000 d 410 000 10 What is the ending balance in Hughes finished goods inventory cost of unsold goods at the end of the month a 15 000 b 25 000 11 c 0 d 40 000 Slagle Company manufactures designer pens Last year fixed costs were 525 000 operating income was 195 000 unit selling price was 60 and unit variable costs were 45 What was Slagle s break even point a 11 667 units b 48 000 units c 35 000 units d 13 000 units The following information applies to questions 12 and 13 On September 1 Seller Company sold merchandise on account to Buyer Company for 34 000 terms 2 10 n eom FOB shipping point Seller cost of merchandise sold was 18 500 On September 2 Buyer paid 325 of transportation costs On September 4 Buyer returned 1 000 of the goods 12 If Buyer Company pays within the discount period what will be the total amount it pays to Seller Company a 32 340 b 33 320 c 33 645 d 32 665 13 When Seller Company records the September 1 transaction it will include which of the following a b c d an increase to cash of 32 340 an increase to accounts receivable of 34 325 a decrease to merchandise inventory of 17 500 a decrease to merchandise inventory of 18 500 14 Becker Company purchased merchandise on account from Seymour Company for 102 000 terms 4 15 n 45 FOB destination Seymour paid the transportation costs of 500 What will be Becker s net cost of merchandise purchased if it pays within the discount period a 98 900 b 98 400 c 98 420 d 97 920 15 Stern Company reports the following selected account balances for 2008 Accounts receivable Administrative expenses Cost of merchandise sold Dividends Income tax expense 14 000 37 000 415 000 2 200 64 000 Interest income Interest expense Merchandise inventory Net sales Selling expenses What is Stern s 2008 net income a 259 800 b 209 800 c 212 000 d 226 000 16 The following information relates to Draughon Company in 2008 Net income Gross profit Income before tax Net sales Income from operations 72 000 132 700 89 800 315 600 95 000 7 000 35 000 50 000 852 000 96 000 What was Draughon s cost of merchandise sold COMS a 204 700 b 182 900 c 243 600 d 220 600 17 Fennell Corporation reports the following selected account balances for 2008 Cost of merchandise sold Sales discounts Sales revenue 410 000 Sales returns and allowances 13 000 Selling expenses 945 000 Transportation in 80 000 95 000 12 500 What is Fennell Corporation s net sales a 442 000 b 852 000 c 839 500 d 535 000 18 Costs that remain constant in total as the level of activity changes are a variable costs b differential costs c mixed costs d fixed costs 19 Valades Company reports the following selected account balances for 2008 Accounts receivable Administrative expenses Cost of merchandise sold Dividends Income tax expense 14 000 37 000 415 000 2 200 64 000 Interest income Interest income Merchandise inventory Net sales Selling expenses 7 000 35 000 50 000 852 000 96 000 What is Valades 2008 gross profit a 437 000 b 451 000 20 a b c d c 268 000 d 233 000 How does a purchase discount affect the buyer s accounts increases merchandise inventory cost increases accounts payable decreases merchandise inventory cost decreases cost of merchandise sold 21 Bell Company purchased merchandise from Stone Company for 87 000 on account Stone paid 675 in transportation costs as required by the purchase contract The shipping terms must have been a FOB shipping point c FOB transportation b FOB merchandise d FOB destination 22 Businesses cannot use cost volume profit analysis for predicting …