Quiz about ACG3173 Exam 2 Practice

Question 1

The following is a summary of information presented on the financial statements of a company on December 31, 20X9.

With respect to net sales revenue, a horizontal analysis reveals ______.

Accepted Answer

19.52% increase in net sales revenue

Answer

$44,000 decrease in net sales revenue

Answer

$44,000 increase in net sales revenue

Answer

237.85% decrease in net sales revenue

Question 2

The following is a summary of information presented on the financial statements of a company on December 31, 20X9.

With respect to long-term liabilities, a horizontal analysis reveals ______.

Accepted Answer

Long-term liabilities decreased by 24.53%

Answer

Long-term liabilities decreased by 44.00%

Answer

Long-term liabilities decreased by $7000

Answer

Long-term liabilities decreased by $22,000

Question 3

Starfruit Inc. provides the following data for the year 20X9:

Net Sales Revenue: $447,940

Cost of Goods Sold: $259,000

The cost of goods sold as a percentage of net sales revenue is ______.

Accepted Answer

57.82%

Answer

57.98%

Answer

58.09%

Answer

57.56%

Question 4

Fig Company reported the following amounts on its balance sheet as of December 31, 20X9 and December 31, 20X8:

For the vertical analysis, what is the percentage of total liabilities for December 31, 20X8?

Accepted Answer

43.41%

Answer

100.00%

Answer

44.29%

Answer

19.10%

Question 5

The financial statements of Persimmon Company include the following items:

What is working capital for 20X9?

Accepted Answer

$57,500

Answer

$31,500

Answer

$190,000

Answer

$100,500

Question 6

The financial statements for Banana Company include the following items:

Compute the current ratio for 20X8.

Accepted Answer

1.21

Answer

6.40

Answer

0.83

Answer

3.90

Question 7

Lime, Inc. has net sales on account of $1,800,000. The average net accounts receivable are $640,000. Calculate the days' sales in receivables.

Accepted Answer

129.89 days

Answer

365.00 days

Answer

341.88 days

Answer

2.81 days

Question 8

Mango, Inc.'s cost of goods sold for the year is $2,100,000, and the average merchandise inventory for the year is $134,000. Calculate the inventory turnover ratio of the company.

Accepted Answer

15.67 times

Answer

6.38 times

Answer

7.84 times

Answer

9.36 times

Question 9

Guava, Inc. provides the following data:

Calculate the days' sales in inventory for 20X9.

Accepted Answer

144.27

Answer

99.55

Answer

49.62

Answer

189.14

Question 10

A company reports total assets of $930,000 and stockholders' equity of $590,000. Calculate the debt ratio.

Accepted Answer

36.56%

Answer

38.82%

Answer

57.63%

Answer

63.44%

Question 11

Tangerine, Inc. provides the following data:

Calculate the debt to equity ratio.

Accepted Answer

0.65

Answer

0.05

Answer

1.23

Answer

0.40

Question 12

Melon, Inc. provides the following income statement for 20X9:

Calculate the times-interest-earned ratio.

Accepted Answer

45.00 times

Answer

44.00 times

Answer

73.00 times

Answer

39.00 times

Question 13

A corporation has 3000 shares, 10% preferred stock of $55.00 par preferred stock, and 8000 shares of common stock outstanding. The net income for the year is $270,000. Calculate earnings per share.

Accepted Answer

$31.69

Answer

$33.75

Answer

$90.00

Answer

$55.00

Question 14

Plum, Inc. provides the following data:

There are no cash sales. Calculate the asset turnover ratio for 20X9.

Accepted Answer

1.98 times

Answer

0.58 times

Answer

0.99 times

Answer

3.81 times

Question 15

The net income of a company for the year was $530,000. The company has no preferred stock. Common stockholders' equity was $1,100,000 at the beginning of the year and $2,100,000 at the end of the year. Calculate the rate of return on common stockholders' equity.

Accepted Answer

33.13%

Answer

20.15%

Answer

48.18%

Answer

25.24%

Question 16

Watermelon, Inc. provides the following data:

Calculate the rate of return on total assets for 20X9.

Accepted Answer

62.39%

Answer

70.82%

Answer

45.84%

Answer

51.39%

Question 17

Apple, Inc. provides the following information for 20X9:

The company has no preferred stock outstanding. Calculate the earnings per share for 20X9.

Accepted Answer

$1.35 per share

Answer

$1.25 per share

Answer

$1.47 per share

Answer

$0.38 per share

Question 18

Kiwi, Inc. provides the following information for 20X8:

The company has no preferred stock outstanding. Calculate the price/earnings ratio of common stock.

Accepted Answer

36.91 times

Answer

31.79 times

Answer

42.31 times

Answer

55.00 times

Question 19

Froot Loop Inc., a cereal manufacturer, has variable costs of $0.60 per unit of product. In May, the volume of production was 28,000 units, and units sold were 20,900. The total production costs incurred were $30,500. What are the fixed costs per month?

Accepted Answer

$13,700

Answer

Answer

Answer

$2,500

Question 20

Skittles Pet store provides a dog wash service. Its highest and lowest bills of $4000 and $2200 were incurred in the months of May and November, respectively. If 400 dogs were washed in May and 100 dogs were washed in November what was the fixed cost associated with the company's water bill? (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)

Accepted Answer

$1600

Answer

Answer

Answer

Question 21

Guava Company has provided the following information:

Sales Price per Unit: $48

Variable Cost per Unit: $10

Fixed Costs per Month: $10,000

Calculate the contribution margin ratio. (Round your answer to two decimal places.)

Accepted Answer

Answer

Answer

Answer

Question 22

Fruity Pebbles Apparel sells fruit themed shirts at $54.00 per shirt. It incurs monthly fixed costs of $8000. The contribution margin ratio is calculated to be 20%. What is the variable cost per shirt? (Round any intermediate calculations and your final answer to two decimal places.)

Accepted Answer

$43.20 per shirt

Answer

$10.80 per shirt

Answer

$54.00 per shirt

Answer

$64.80 per shirt

Question 23

Avocado Company sells guitars to Mexican restaurants. The guitars sell for $11, and the fixed monthly operating costs are as follows:

Rent and Utilities: $600

Wages and Benefits to Employees: $2400

Other Expenses: $472

Avocado understands that for every dollar of sales, $0.65 went to cover fixed costs, and anything above that point was profit.

What is the amount of revenue that Avocado should earn each month to break even? (Round your answer to the nearest whole dollar.)

Accepted Answer

$5342

Answer

Answer

Answer

Question 24

Fruit Sushi Corporation sells delicious fruit sushi at a wholesale price of $5.00 per unit. The variable cost to manufacture is $2.00 per unit. The monthly fixed costs are $7500. Its current sales are 27,000 units per month. If the company wants to increase its operating income by 30%, how many additional units must it sell? (Round any intermediate calculations to two decimal places and your final answer up to the nearest whole unit.)

Accepted Answer

6000 fruit sushi

Answer

8000 fruit sushi

Answer

4,000 fruit sushi

Answer

34,000 fruit sushi

Question 25

Mango LLC sells its product for $55 and has variable cost of $35 per unit. The total fixed costs are $26,000.

What will be the effect on the breakeven point in units if variable cost increases by $5 due to an increase in the cost of direct materials? (Round your answer up to the nearest whole unit.)

Accepted Answer

It will increase by 434 units.

Answer

It will decrease by 170 units.

Answer

It will decrease by 434 units.

Answer

It will increase by 170 units.

Question 26

Papaya Corporation has the following product information:

Sales Price: $8.00 per Unit

Variable Cost: $5.25 per Unit

Fixed Cost: $23,000 per Month

Volume: 10,500 Units per Month

The company believes that the volume will go up to 12,000 units if the company reduces its sales price to $7.25. This change would decrease operating income by ______.

Accepted Answer

It will decrease by $4875.

Answer

It will decrease by $5875.

Answer

It will increase by $5875.

Answer

It will increase by $4875.

Question 27

Crazy Coconut LLC has two products:

Annual fixed costs are $280,000.

What is the break even amount in units, assuming that Crazy Coconut sells five jet boats for every two ski boats sold? (Round any intermediate calculations to two decimal places, and your final answer to the nearest unit.)

Accepted Answer

32 jet boats and 13 ski boats

Answer

7 jet boats and 6 ski boats

Answer

6 jet boats and 7 ski boats

Answer

13 jet boats and 32 ski boats

Question 28

Fruit Bouquet Inc manufactures fruit bouquets. The company produces at full capacity for six months each year to meet peak demand; the manufacturing facility operates at 80% of capacity for the other six months of the year. The company has provided the following data for the year:

Fruit Bouquet Inc. receives an offer to produce 6000 fruit bouquets for a special event. This is a one-time opportunity during a period when the company has excess capacity. What is the minimum sales price the company should accept for the order?

Accepted Answer

$23

Answer

$17

Answer

$20

Answer

$30

Question 29

Fruit Computer Company makes special fruit themed computers. Each unit sells for $410. Fruit Computer Company produces and sells 12,500 units per year. They have provided the following income statement data:

A foreign company has offered to buy 80 units for a reduced sales price of $300 per unit. The marketing manager says the sale will not affect the company's regular sales. The sales manager says that this sale will require variable selling and administrative costs. The production manager reports that it would require an additional $20,000 of fixed manufacturing costs to accommodate the specifications of the buyer. If Fruit Computer Company accepts the deal, how will this impact operating income?

Accepted Answer

Operating income will decrease by $4320.

Answer

Operating income will decrease by $15,680.

Answer

Operating income will increase by $4320.

Answer

Operating income will increase by $24,000.

Question 30

Fruit Car Company manufactures 100 fruit themed cars per month. A compact media center is included in each car. Fruit Car Company manufactures the media center in-house but is considering the possibility outsourcing this function. At present, the variable cost per unit is $275, and the fixed costs are $42,000 per month. The CEO, wishes to increase operating income by $1000. He has an offer from a foreign producer to provide the media centers at a contract cost of $300 per unit. The required savings in fixed costs in order to achieve his objective would be ______.

Accepted Answer

$3500

Answer

$27,500

Answer

$2500

Answer

$1000

Question 31

Fruit Boat Company manufactures 100 fruit themed boats per month. A navigation system is included in each boat. Fruit Boat Company manufactures the navigation system in-house but is considering the possibility of outsourcing this function. At present, the variable cost per unit is $280, and the fixed costs are $38,000 per month. If it outsources the navigation system, fixed costs could be reduced by half, and the vacant facilities could be rented out to earn $3000 per month of rental income. What is the maximum contract cost that Fruit Boat Company should pay for outsourcing?

Accepted Answer

any cost lower than $500 per unit

Answer

any cost lower than $280 per unit

Answer

any cost lower than $380 per unit

Answer

any cost lower than $470 per unit

Question 32

Fruit Basket Company manufactures fruit baskets. The basket component, not including the fruit, is made in-house. Details of the baskets are as follows:

A foreign factory has offered to supply Fruit Basket Company with ready-made baskets for a price of $13 per basket. Assume that Fruit Basket Company's fixed costs are unavoidable, but that Fruit Basket Company could use the vacated production facilities to earn an additional $7500 of profit per month. If Fruit Basket Company decides to outsource, monthly operating income will increase by ______.

Accepted Answer

$1200

Answer

$7500

Answer

$16,000

Answer

$24,600

Question 33

The income statement for Orange Company is divided by its two product lines, juice and fruit, as follows:

Orange Company is considering eliminating the fruit product line. If this line is eliminated, Orange Company will be able to eliminate $73,000 of total fixed costs. By how much would this business decision increase operating income?

Accepted Answer

$14,000

Answer

$59,000

Answer

$135,000

Answer

$73,000

Question 34

Fruit Pie Inc. has three product lines: Strawberry, Cherry, and Apple. The following information is available:

The company is deciding whether to drop product line Apple because it has an operating loss. Assuming fixed costs are unavoidable, if Fruit Pie Inc. drops product line Apple and rents the space formerly used to produce product Apple for $19,000 per year, total operating income will be ______.

Accepted Answer

$29,000

Answer

$10,000

Answer

$25,000

Answer

$21,000

Question 35

Gushers Company produces 1000 packages of fruit snacks per month. The sales price is $4 per pack. Variable cost is $1.60 per unit, and fixed costs are $1800 per month. Management is considering adding a vitamin supplement to improve the value of the product. The variable cost will increase from $1.60 to $1.70 per unit, and fixed costs will increase by 20%. At what sales price for the new product will the two alternatives (sell as is or process further) produce the same operating income?

Accepted Answer

$4.46

Answer

$4.00

Answer

$3.86

Answer

$0.60

Question 36

Fruit Sushi Inc. produces 1000 packages of fruit sushi per month. The sales price is $4 per pack. Variable cost is $1.50 per unit, and fixed costs are $1700 per month. Management is considering adding a chocolate coating to improve the value of the product by making it a dessert item. The variable cost will increase from $1.50 to $1.90 per unit, and fixed costs will increase by 20%. The CEO wants to price the new product at a level that will bring operating income up to $3000 per month. What sales price should be charged?

Accepted Answer

$6.94

Answer

$2.10

Answer

$4.00

Answer

$2.50

Question 37

Fruit Computer Company makes a fruit themed computer. Variable costs are $220 per unit, and fixed costs are $31,000 per month. Fruit Computer Company sells 500 units per month at a sales price of $320. The company believes that it can increase the price if the computer quality is upgraded. If so, the variable cost will increase to $240 per unit, and the fixed costs will rise by 25%. The CEO wishes to increase the company's operating income by 30%. Which sales price level would give the desired results?

Accepted Answer

$366.90 per unit

Answer

$282.00 per unit

Answer

$358.00 per unit

Answer

$1088.00 per unit

ACG3173 Exam 2 Practice

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