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Managerial Accounting MCQs
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Genius Professor Mullen Co. is using the Target Cost approach on a new product. Information gathered so far reveals:

Expected annual sales (Market Sales)                        400,000 Units

Desired profit per unit (DP)                            \$0.25

Target Cost (TC)                                             \$168,000

What is the Market Price (MP) per unit?

2. Lao Shu Bruce Inc. plans to introduce a new product and is using the target cost approach. Projected sales revenue is \$810,000 (MP) (\$4.50 per unit) and target costs (TC) are \$729,000. What is the desired profit (DP) per unit?

3. Professor Mullen’s Excellent Suit Co. has received a shipment of suits that cost \$150 each. If the company uses cost-plus pricing and applies a markup (M/U) percentage of 60%, what is the Target sale price (TSP) per suit?

4. The calculation to determine Target Cost (TC) is

5. Professor Mullen’s Best Buddest Boombox Inc. wants to produce and sell a new lightweight radio. Desired profit (DP) per unit is \$2.76. The expected unit sales price is \$33 (MP) based on 10,000 units. What is the total target cost (TC)?

Use the following to answer questions 6 – 7:

The Lao Shu Division of Fir products, Inc. manufactures rubber molding and sells them externally (SP) for \$165. Its variable cost (V/C) is \$75 per unit, and its fixed cost (F/C) per unit is \$21. Fir’s president wants the Lao Shu Division to transfer 5,000 units to another company at an offer price of \$96.

6. Assuming the Lao Shu Division has available (excess) capacity of 5,000 units, the minimum transfer price (MTP) it should accept is

7. Assuming the Lao Shu Division does not have any available (no excess or zero) capacity, the minimum transfer price (MTP) it should accept is

8. The production budget of Most Excellent Professor Mullen Inc shows expected unit budgeted sales (BS) of 32,000. Beginning inventory (BI) finished goods units are 5,600. Required production (RP) units are 33,600. What are the desired ending inventories (EI) finished goods units?

9. Old and Feeble Professor Mullen Inc plans to sells 4,000 purple lawn chairs during May, 3,800 in June, and 4,000 during July. The company keeps 15% of the next month’s sales as ending inventory (EI). How many units should Old & Feeble Professor Mullen Inc produce (RP) during June?

10. Old Retired Professor Mullen’s Nursery plans to sells 160 potted during April and 120 units in May. The Nursery keeps 15% of the next month’s sales as ending inventory (EI). How many units should Old Retired Professor Mullen’s Nursery produce (RP) during April?

11. Most Excellent Professor Mullen Company has 12,000 units in beginning finished goods (BI). If sales (BS) are expected to be 60,000 units for the year and Unger desires ending (EI) finished goods of 15,000 units, how many units must the Most Excellent Professor Mullen Company produce (RP)?

12. Brilliant Professor Mullen Inc determined that the budgeted cost of producing a product is \$30 (UPC) per unit. One June 1, there were 60,000 units (BI) on hand, the sales department budgeted sales of 225,000 (BS) units in June, and the company desires to have 90,000 units (EI) on hand on June 30. The budgeted cost of goods manufactured (CGS) for June would be

13. If there were 60,000 pounds (BI) of raw material on hand on January 1, and if 120,000 pounds (EI) are desired for inventory at January 31, and 360,000 pounds (RP) are required for January production, how many pounds of raw material should be purchased in January (DM-RP)?

14. Lao Shu Company required production (RP) for June is 66,000 units. To make one unit of finished product, three pounds of desired material Z are required. Actual beginning and desired ending inventories of direct material Z are 150,000 and 165,000 pounds, respectively. How many pounds of direct material Z must be purchased (DM-RP)?

15. Brilliant Professor Mullen determine that 27,000 pounds (DM-RP) of direct material are needed for production in July. There are 1,600 pounds of direct material on hand at July 1 and the desired ending inventory is 1,400 pounds. If the cost per unit of direct material is \$3, what is the budgeted total cost of direct material purchases?

16. Lao Shu Company is preparing its direct labor budget for May. Projections for the month are that 16,700 units (RP) are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is \$12, what is the total budgeted direct labor cost for May?

17. Genius Professor Mullen Company has the following budgeted sales: January \$80,000, February \$120,000 and March \$100,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sales, and 50% the next month. The total expected cash receipt (CRJ) during March are:

18. Lao Shu Mouse Company expects to purchase \$90,000 of material in July and \$105,000 of material in August. Three – quarters (75%) of all purchases are paid for the month of purchase, and the other one further (25%) are paid for in the month following the month of purchase. How much will August’s cash disbursements (CDJ) for materials purchases be?

19. Lao Xiao Miao Company has the following budgeted sales: July \$100,000, August \$150,000, and September \$125,000, 40% of the sales for cash and 60% are on credit. For the credit sales, 50% collected in the month of sales, and 50% the next month. The total expected cash receipts (CRJ) during September are

20. Xiao Miao Company’s direct materials budget shows total cost of direct material purchases for April \$300,000, May \$360,000 and June \$420,000. Cash payments are 60% in the month of purchases and 40% in the following month. The budgeted cash payments (CDJ) for June are:

21. The following credit sales are budgeted by The Brilliant & Genius Professor Mullen Company:

The company’s past experience indicates that 70% of the accounts receivable are collected in the month of sale, 20% in the month following, and 8% in the second following in the sale, and 2% U/C. The anticipated cash inflow (CRJ) for the month of April is

22. The Most Brilliant Professor Mullen Company’s past experience indicates that 60% of its credit sales are collected in the month of sales, 30% in the next month, and 5% in the second month after the sale; the reminder (5%) is never collected. Budgeted credit sales were:

The cash inflow (CRJ) in the month of March is expected to be

23. Which one of the following items would never appear on Professor Mullen’s Cash budget?

24. Lao Shu Bruce Company’s direct material budget shows total cost of direct material purchases for January \$125,000, February \$150,000 and March \$175,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments (CDJ) for March are

25. During September, the capital expenditure budget a \$280,000 purchase of equipment. The September cash balance (Net Cash) from Operations is budgeted to be \$40,000 before considering the capital expenditure purchase. The company wants to maintain a minimum cash balance (EI) of \$20,000. What is the minimum cash loan that must be planned to be borrowed from the bank during September?

26. On January 1, Old Lao Shu Bruce Company has a beginning cash balance of \$84,000. During the year, the company expects cash disbursements of \$680,000 and cash receipts of \$580,000. If Old Lao Shu Bruce Company requires an ending cash balance of \$80,000, then Old Lao Shu must borrow

27. On January 1, Xiao Miao Inc has a beginning cash balance of \$21,000. During the year, the company expects cash disbursements of \$170,000 and cash receipts of \$145,000. If Xiao Miao Inc requires an ending cash balance of \$20,000, then company must borrow

28. The following information was taken from the Most Brilliant Professor Mullen Company’s cash budget for the month of July:

If the company has a policy of maintaining a minimum end of the month cash balance of \$250,000, the amount the company would have to borrow is

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