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problem 1: ABC Company produces two products (product X and product Y) from a joint process. Product X has been allocated $30,000 of the total joint cost of $50,000. A total of 3,000 units of product X are produced from the joint process. Product X can be sold at the split-off point for $8 per unit or can be further processed for an additional cost of $12,000 and then sold for $15 per unit. If product X is processed further what would be the impact on the overall profit of the company compared to sales in its form directly after the split-off point?:

a) $21,000 incremental loss.
b) No incremental profit.
c) $9,000 incremental profit.
d) $33,000 incremental profit.

problem 2: In year 1 of a company the revenues were $50,000, expenditures were $30,000 and the shareholder's dividends were $10,000. What is the total income recognized?:

a) $50,000 net loss.
b) $30,000 net loss.
c) $10,000 net income.
d) $20,000 net income.

problem 3: Acme Corporation is planning to sell 60,000 units of its product in March. The company started March with 8,000 completed units in finished goods inventory and plans to end March with 2,000 units in finished goods inventory. How much finished units does Acme plan to produce in March?:

a) 52,000
b) 54,000
c) 58,000
d) 66,000

problem 4: A manufacturing company’s flexible budget exhibits a selling price of $250 per unit, variable cost of $175 per unit and fixed costs of $200,000. The company expects to sell 6,000 units. What would its flexible budget show as total income:

a) $250,000 loss
b) $200,000 gain
c) $250,000 gain
d) $450,000 gain

problem 5: For company X the total profit margin = 5%, return on assets = 10% and assets = $250,000. Compute the sales for company X.:

a) $12,500
b) $25,000
c) $200,000
d) $500,000

problem 6: Acme Corporation sells one of their products for $50.00 per unit with a variable cost per unit of $30.00. Determine the break-even point in units if its fixed costs are $2,000,000?:

a) 40,000
b) 50,000
c) 66,667
d) 100,000

problem 7: Compute return on invested capital. Suppose that net income is $100,000, interest expense is $20,000, average value of assets is $1,000,000, average total equity is $550,000 and average invested capital is $600,000:

a) 10%
b) 16.6%
c) 20%
d) 21.82%

problem 8: Compute the payback period based on the information provided. Net investment is $500,000. Cash flows are $150,000 for Year 1; $150,000 for Year 2; $100,000 for Year 3; $200,000 for Year 4; $100,000 for Year 5:

a) 4 years
b) 3 years
c) 3.5 years
d) 4.5 years

problem 9: Company XYZ started the year with $1,000,000 in assets and ended the year with $1,200,000 in assets. During the year the company has sales of $1,500,000. Find out the company's asset turnover ratio:

a) 1.20
b) 1.25
c) 1.36
d) 1.50

problem 10: ABC Company’s beginning inventory and ending inventory for the year are $500,000 and $400,000 respectively. Its cost of goods sold during the year is $1,800,000. On average how many days in inventory does ABC Company have? Suppose 365 days in a year:

a) 81
b) 87
c) 91
d) 101

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M92831

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