Professional Documents
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MOCK TEST 3
ARMAGHAN AHMED
education4all
(80) 40
(160) (40)
(240) (120)
40
40
80
80
0 120
Question 17 - CIA 1189 IV.17 - Manufacturing Input Variances -- Materials and Labor
One of the items produced by a manufacturer of lawn and garden tools is a chain saw. The direct labor standard for
assembling and testing a chain saw is 2.5 hours at $8 per hour. Budgeted production for October was 1,200 units.
Actual production during the month was 1,000 units, and direct labor cost was $27,840 for 3,200 hours. What was the
direct labor price (rate) variance for October?
A. $2,240 unfavorable.
B. $5,600 unfavorable.
C. $2,240 favorable.
(c) HOCK international, page 6
Question 40 - CMA 695 P2 Q10 - Investments, PP&E (Fixed Assets), and Intangible and Other Assets
A steel press machine is purchased for $50,000 cash and a $100,000 interest bearing note payable. The cost to be
recorded as an asset (in addition to the $150,000 purchase price) should include all of the following except
A. Freight and handling charges.
B. Insurance while in transit.
C. Assembly and installation costs.
D. Interest on the note payable.
Transaction
Inventory
Purchase
Sales
Purchase
Sales
Units
1,400
1,800
2,000
1,500
1,400
Unit
Cost
$2.45
2.75
Total
Cost
$3,430
4,950
2.90 4,350
If Sawyer uses a last-in, first-out perpetual inventory system, the total cost of the inventory for Part Number C-588 at
May 31 is
A. $3,575
B. $3,185
C. $3,230
D. $3,521
Question 47 - CMA 0687 3.12 - Investments, PP&E (Fixed Assets), and Intangible and Other Assets
On January 1, Boggs, Inc. paid $700,000 for 100,000 shares of Mattly Corporation representing 30% of Mattly's
outstanding common stock. The following computation was made by Boggs.
(c) HOCK international, page 15
Question 48 - CMA 688 4.22 - Investments, PP&E (Fixed Assets), and Intangible and Other Assets
When preparing consolidated financial statements, the entity being accounted for is the
A. Minority interest.
B. Legal entity.
C. Economic entity.
D. Parent.
Question 17 - CIA 1189 IV.17 - Manufacturing Input Variances -- Materials and Labor
(c) HOCK international, page 24
Question 40 - CMA 695 P2 Q10 - Investments, PP&E (Fixed Assets), and Intangible and Other Assets
A. Any cost that is incurred in order to get the asset ready and available for use should be included in the cost of that
asset. Freight and handling are costs necessary to get the asset ready and available for use.
B. Any cost that is incurred in order to get the asset ready and available for use should be included in the cost of that
asset. Insurance while in transit is a cost necessary to get the asset ready and available for use.
C. Any cost that is incurred in order to get the asset ready and available for use should be included in the cost of that
asset. Assembly and installation are costs necessary to get the asset ready and available for use.
D. Any cost that is incurred in order to get the asset ready and available for use should be included in the
cost of that asset. Interest that will be incurred on the note payable is a financing decision and is not
necessary in order for the asset to be used. This interest will be recognized as interest expense when it is
incurred.
Question 47 - CMA 0687 3.12 - Investments, PP&E (Fixed Assets), and Intangible and Other Assets
A. This would be the correct way to account for the investment income under the equity method,not under the fair
value method. See the correct answer for a complete explanation.
B. This is 30% of the net income of Mattiy minus 30% of the dividends paid by Mattiy. This is not the correct way to
account for investment income under either the fair value method or under the equity method.
C. Under the fair value method, investment income is recognized as dividends are received. This is not the amount of
dividends received from Mattiy by Boggs. See the correct answer for a complete explanation.
D. Under the fair value method, investment income is recognized as dividends are received. Since Boggs
owned 30% of Mattly, they would recognize as income 30% of the dividend that Mattly distributed, or $30,000.
Question 48 - CMA 688 4.22 - Investments, PP&E (Fixed Assets), and Intangible and Other Assets
A. This answer is incorrect. See the correct answer for a complete explanation.
B. This answer is incorrect. See the correct answer for a complete explanation.
C. Consolidated financial statements are prepared as though the parent (the investor corporation) and the
subsidiary or subsidiaries (the investee[s]) are a single economic entity, not the legal entities that exist.
D. This answer is incorrect. See the correct answer for a complete explanation.