31. A company\'s income statement showed the following: net income, $133,000 and

Question

31. A company's income statement showed the following: net income, $133,000 and depreciation expense, $32,700. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $10,300; merchandise inventory increased $19,800; and accounts payable increased $4,300. Calculate the net cash provided or used by operating activities.

Multiple Choice

A. $131,300.

B. $191,500.

C. $160,500.

D. $127,000.

E. $170,900.

32. A company reported that its bonds with a par value of $50,000 and a carrying value of $62,000 are retired for $66,000 cash, resulting in a loss of $4,000. The amount to be reported under cash flows from financing activities is:

Multiple Choice

A. $(4,000).

B. $(66,000).

C. $12,000.

D. $(12,000).

E. $(62,000).

33. Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two departments using different allocation bases. The following information is available for the current period:

The amount of salaries that should be allocated to Grinding for the current period is:

Multiple Choice

A. $23,000.

B. $30,800.

C. $17,800.

D. $44,000.

E. $13,020.

34. Use the following data to find the direct labor rate variance if the company produced 3,500 units during the period.

Multiple Choice

A. $6,375 favorable.

B. $8,750 favorable.

C. $6,375 unfavorable.

D. $7,000 unfavorable.

E. $7,000 favorable.

35. Epsilon Co. can produce a unit of product for the following costs:

An outside supplier offers to provide Epsilon with all the units it needs at $61.50 per unit. If Epsilon buys from the supplier, the company will still incur 40% of its overhead. Epsilon should choose to:

Multiple Choice

A. Buy since the relevant cost to make it is $74.10.

B. Make since the relevant cost to make it is $57.50.

C. Make since the relevant cost to make it is $49.20.

D. Buy since the relevant cost to make it is $57.50.

E. Buy since the relevant cost to make it is $49.20.

Office Expenses Total Allocation Basis Salaries $ 44,000 Number of employees Depreciation 21,000 Cost of goods sold Advertising 44,000 Net sales

Explanation / Answer

31) Net income $    133,000 Adjustments: Depreciation $       32,700 Decrease in accounts receivable $       10,300 Increase in merchandise inventory $     (19,800) Increase in accounts payable $          4,300 $       27,500 Net cash provided by operating activities $    160,500 Answer: Option [C] 32) Option [B] 33) Salaries to be allocated to grinding = 44000*2100/3000 = $       30,800 Answer: Option [B] 34) Direct labor rate variance = Actual hours*(Actual rate-Standard rate) = 12750*(7.5-7.0) = $6,375 [U] Answer: Option [C] 35) Relevant cost per unit = 8.3+24.3+41.50*60% = $          57.50 (Unit costs that can be avoided) Option: B. Make since the relevant cost to make it is $57.50.

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