101. Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? A. a decrease in inventoryB. a decrease in accounts payableC. preferred dividends declared and paidD. a decrease in accounts receivable

102. Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? A. depreciation expenseB. an increase in inventoryC. a gain on the sale of equipmentD. dividends declared and paid

103. The net income reported on the income statement for the current year was $250,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: 

End

Beginning

Cash

$  50,000

$  60,000

Accounts receivable

112,000

108,000

Inventories

105,000

93,000

Prepaid expenses

4,500

6,500

Accounts payable (merchandise creditors)

75,000

89,000

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? A. $271,000B. $279,000C. $327,000D. $256,000

104. The following information is available from the current period financial statements: 

Net income

$150,000

Depreciation expense

28,000

Increase in accounts receivable

16,000

Decrease in accounts payable

21,000

The net cash flow from operating activities using the indirect method is A. $215,000B. $173,000C. $183,000D. $141,000

105. Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $15,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is A. $45,000B. $55,000C. $75,000D. $65,000

106. Accounts receivable arising from sales to customers amounted to $40,000 and $35,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $110,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is A. $115,000.B. $110,000.C. $105,000.D. $150,000.

107. Loster Company reported a net loss of $13,000 for the year ended December 31, 2008. During the year, accounts receivable decreased $5,000, merchandise inventory increased $8,000, accounts payable increased by $10,000, and depreciation expense of $5,000 was recorded. During 2008, operating activities A. provided net cash of $8,000.B. provided net cash of $1,000.C. used net cash of $8,000.D. used net cash of $1,000.

108. A company had net income of $242,000. Depreciation expense is $26,000. During the year, Accounts Receivable and Inventory increased $15,000 and $40,000, respectively. Prepaid Expenses and Accounts Payable decreased $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much cash was provided by operating activities? A. $207,000.B. $211,000.C. $274,000.D. $295,000.

109. Mega Sales sells some used store fixtures. The acquisition cost of the fixtures is $12,500, the accumulated depreciation on these fixtures is $9,750 at the time of sale. The fixtures are sold for $3,000. The value of this transaction in the Investing section of the statement of cash flows is: A. $12,500B. $3,000C. $2,750D. $250

110. Concerning the Indirect Statement of Cash Flows, select the correct statement. A. The management of a company would mostly utilize the Indirect Statement of Cash Flows as a management tool since it starts with Net Income from the Income Statement.B. The management of a company would not normally distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it would most likely confuse the average reader.C. The management of a company would most likely distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it starts with Net Income and ends in the current cash balance which increases reader confidence in the report.D. The management of a company would most likely distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it does not present any relation to the other statements of the report, therefore it is least likely to confuse the reader.

111. Target costing is arrived at by 
A. taking the selling price and subtracting desired profit.
B. taking the selling price and adding desired profit.
C. taking the selling price and subtracting the budget standard cost.
D. taking the budget standard cost and reducing it by 10%.

112. Paint Company manufactures Paint X and Paint Y and can sell all it can make of either. Based on the following data, assuming the number of hours is a constraint, which statement is true,?
 

    X

     Y

Sales Price

$32

$40

Variable Cost

22

24

Hours needed to process

5

8

 
A. X is more profitable than Y
B. Y is more profitable than X
C. Neither X nor Y is profitable.
D. X and Y are equally profitable.

113. Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process, Tales take 7 hours, and Wales take 1 hour.

Which product has the highest contribution margin per machine hour? 
A. Bales
B. Tales
C. Wales
D. Bales and Tales have the same

114. Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process, Tales take 7 hours, and Wales take 1 hour.

What is the contribution margin per machine hour for Bales? 
A. $5
B. $7
C. $35
D. $28

115. Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process, Tales take 7 hours, and Wales take 1 hour.

What is the contribution margin per machine hour for Tales? 
A. $4
B. $7
C. $28
D. $35

116. Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process, Tales take 7 hours, and Wales take 1 hour.

What is the contribution per machine hour for Wales? 
A. $35
B. $28
C. $17
D. $7

117. Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process, Tales take 7 hours, and Wales take 1 hour.

Assuming that Widgeon Co. can sell all of the products they can make, what is the maximum contribution margin they can earn per month? 
A. $49,000
B. $70,000
C. $56,000
D. $34,000

118. Widgeon Co. manufactures three products: Bales; Tales; and Wales. The selling prices are: $55; $78; and $32, respectively. The variable costs for each product are: $20; $50; and $15, respectively. Each product must go through the same processing in a machine that is limited to 2,000 hours per month. Bales take 5 hours to process, Tales take 7 hours, and Wales take 1 hour.

Assume that Widgeon produced enough product with the highest contribution margin per unit to use 1,000 hours of machine time. Product demand does not warrant any more production of that product. What is the maximum additional contribution margin that can be realized by utilizing the remaining 1,000 hours on the product with the second highest contribution margin per hour? 
A. $35,000
B. $7,000
C. $4,000
D. $28,000

119. Flyer Company sells a product in a competitive marketplace.  Market analysis indicates that their product would probably sell at $48 per unit.  Flyer management desires a 12.5% profit margin on sales.  Their current full cost per unit for the product is $44 per unit.

What is the target cost of the company’s product? 
A. $44
B. $42
C. $43
D. $40

120. Flyer Company sells a product in a competitive marketplace.  Market analysis indicates that their product would probably sell at $48 per unit.  Flyer management desires a 12.5% profit margin on sales.  Their current full cost per unit for the product is $44 per unit.

What is the desired profit per unit? 
A. $6
B. $8
C. $5
D. $4

59) If the price of a firm's product falls, the firm's demand for labor curve

A) does not shift and there is no movement along it.

B) shifts leftward.

C) shifts rightward.

D) does not shift but there is a movement along it.

E) might shift leftward or rightward depending on whether the demand for the firm's product is elastic or inelastic.

60) If a firm uses new technology that increases its demand for labor, the firm's demand for labor curve

A) shifts leftward.

B) shifts rightward only if the demand for labor is elastic.

C) shifts rightward no matter if the demand for labor is elastic or inelastic.

D) does not shift, but there is a movement along it.

E) shifts rightward only if the demand for labor is inelastic.

61) If the wage rate increases, a firm's demand for labor curve

A) does not shift, and there is no movement along it.

B) shifts leftward.

C) shifts rightward only if the elasticity of demand for labor is elastic.

D) does not shift, but there is a movement along it.

E) shifts rightward only if the elasticity of demand for labor is inelastic.

62) The price of capital falls. Assuming that the firm does not increase the quantity it produces, in the long run the firm's demand for labor curve

A) does not shift, and there is no movement along it.

B) shifts leftward.

C) shifts rightward only if the elasticity of demand for labor is elastic.

D) does not shift, but there is a movement along it.

E) shifts rightward only if the elasticity of demand for labor is inelastic.

63) The above figure shows the demand for labor curve for workers at a Pizza Hut in Canada. If the wage rate is $6 per hour, then the

i.quantity of workers Pizza Hut demands is 10 workers.

ii.Pizza Hut would have been willing to hire the 6th worker even if they had to pay $7 per hour rather than $6 per hour.

iii.value of the marginal product of the 10th worker is $6 per hour.

A) i only

B) ii only

C) iii only

D) i and iii

E) i, ii, and iii

64) The above figure shows the initial demand for labor curve at a Pizza Hut in Canada. The wage rate is $6 an hour. If the demand for pizzas increases so that the price of a pizza rises,

A) at the wage rate of $6 per hour, Pizza Hut hires fewer than 10 workers.

B) Pizza Hut's demand for labor curve shifts rightward.

C) the supply of labor curve shifts rightward.

D) Pizza Hut's demand for labor curve shifts leftward.

E) the supply of labor curve shifts leftward.

65) If the price of movie tickets increases, there is

A) an increase in the demand for actors and actresses.

B) a decrease in the demand for actors and actresses.

C) no change in the demand for actors and actresses.

D) a decrease in the supply of actors and actresses.

E) an increase in the supply of actors and actresses.

66) Robotic technology is a substitute for labor in many manufacturing processes. If the price of robotic technology decreases and the scale of the firm's production does not change, there is

A) a decrease in the demand for labor.

B) an increase in the demand for labor.

C) no change in the demand for labor.

D) an increase in the supply of labor.

E) a decrease in the supply of labor.

67) If the price of capital falls, in the long run under what circumstance could the demand for labor increase?

A) The demand for labor can never increase when the price of capital falls.

B) The demand for labor will always increase when the price of capital falls.

C) It increases if the scale of production increases enough.

D) It increases if the demand for labor is inelastic.

E) None of the above answers is correct.

68) If the price of capital rises, in the long run the demand for labor

A) definitely increases.

B) definitely decreases.

C) definitely is unaffected.

D) could increase or decrease, depending on the change in the scale of production.

E) changes only if the supply of labor changes.

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