Question

1)

A company had net income of $2,740,000, net sales of $26,500,000, and average total assets of $11,800,000. Its return on total assets equals:

Multiple Choice

23.22%.

44.53%.

10.34%.

4.31%.

430.66%.

2)

Using the information below, calculate cost of goods sold for the period:

Sales revenues for the period	$	1,316,000
Operating expenses for the period		251,000
Finished Goods Inventory, January 1		48,000
Finished Goods Inventory, December 31		53,000
Cost of goods manufactured for the period		552,000

Multiple Choice

$798,000.

$518,000.

$547,000.

$793,000.

$412,000.

3)

The sales budget for Modesto Corp. shows that 21,000 units of Product A and 23,000 units of Product B are going to be sold for prices of $11.00 and $13.00, respectively. The desired ending inventory of Product A is 30% higher than its beginning inventory of 3,000 units. The beginning inventory of Product B is 3,500 units. The desired ending inventory of B is 4,000 units. Budgeted purchases of Product B for the year would be:

Multiple Choice

15,500 units.

23,500 units.

21,500 units.

26,500 units.

29,500 units.

4)

Using the information below, compute the raw materials inventory turnover:

Raw Materials Used	$	88,500
Beginning Raw Materials Inventory		8,300
Ending Raw Materials Inventory		9,600

Multiple Choice

379.31.

9.89.

10.11.

9.22.

10.82.

5)

Using the information below, calculate net income for the period:

Sales revenues for the period	$	1,314,000
Operating expenses for the period		249,000
Finished Goods Inventory, January 1		46,000
Finished Goods Inventory, December 31		51,000
Cost of goods manufactured for the period		550,000

Multiple Choice

$794,000.

$789,000.

$418,000.

$520,000.

$545,000.

Answer 1

Answer to Question 1:

Return on Total Assets = Net Income / Average Total Assets
Return on Total Assets = $2,740,000 / $11,800,000
Return on Total Assets = 23.22%

Answer to Question 2:

Cost of Goods Sold = Finished Goods Inventory, January 1 + Cost of Goods Manufactured - Finished Goods Inventory, December 31
Cost of Goods Sold = $48,000 + $552,000 - $53,000
Cost of Goods Sold = $547,000

Answer to Question 3:

Product B:

Budgeted Purchases = Budgeted Sales + Desired Ending Inventory - Beginning Inventory
Budgeted Purchases = 23,000 + 4,000 - 3,500
Budgeted Purchases = 23,500 units

Answer to Question 4:

Average Raw Materials Inventory = (Beginning Raw Materials Inventory + Ending Raw Materials Inventory) / 2
Average Raw Materials Inventory = ($8,300 + $9,600) / 2
Average Raw Materials Inventory = $8,950

Raw Materials Inventory Turnover = Raw Materials Used / Average Raw Materials Inventory
Raw Materials Inventory Turnover = $88,500 / $8,950
Raw Materials Inventory Turnover = 9.89

Answer to Question 5:

Cost of Goods Sold = Finished Goods Inventory, January 1 + Cost of Goods Manufactured - Finished Goods Inventory, December 31
Cost of Goods Sold = $46,000 + $550,000 - $51,000
Cost of Goods Sold = $545,000

Net Income = Sales Revenue - Cost of Goods Sold - Operating Expenses
Net Income = $1,314,000 - $545,000 - $249,000
Net Income = $520,000