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Practice Test 9 - CPA Bar

20 questions. Answer them in any order, then submit to see your score and every explanation.

  1. In activity-based costing, a batch-level activity is best described as which of the following?
  2. Kellner Industries' budgeted fixed overhead for the month is $72,000. Actual fixed overhead incurred was $75,600. What is the fixed overhead budget (spending) variance?
  3. Which of the following is the most likely explanation for the discrepancy between the growth in logged meetings and the growth in sales revenue?
  4. Using the pro forma data (net income $1,470,000, revenue $8,000,000), what is the projected net profit margin?
  5. The profitability index (PI) is calculated as which of the following?
  6. A company reports net income of $1,248,000, beginning total assets of $8,000,000, and ending total assets of $9,600,000. What is the return on assets (ROA)?
  7. A private e-commerce company has experienced declining net income and is evaluating shareholder returns relative to peers. Selected year-end data (in millions): Net income 8; Average equity 40. ROE is 8/40 = 20%; industry benchmark ROE is 22\%. What insight does the ROE provide regarding the company's profitability?
  8. A private logistics company is preparing an executive report showing monthly fuel expense for the past 18 months to identify whether cost-control initiatives reduced volatility. The objective is trend analysis over time. What type of visualization would best represent the data set for trend analysis?
  9. A company's primary manufacturing facility relies on a single, aging piece of custom machinery for a critical step in its production line. Frequent breakdowns of this machine have led to production stoppages and delayed shipments. This situation is a primary example of:
  10. A budget vs. actual report for the sales department shows: budgeted variable selling expenses $480,000 and actual $530,000; budgeted fixed selling expenses $240,000 and actual $245,000. What is the total selling cost variance?
  11. An acquisition target has $20,000,000 revenue and $2,000,000 EBITDA. The proposed price is $18,000,000 (9x EBITDA). Estimated synergies are $1,000,000 annually. Post-acquisition annual debt service is $1,600,000. Which assessment is most analytically sound?
  12. An IT application control rejects invoice amounts exceeding $500,000 and requires supervisor override to proceed. During the year, 12 supervisor overrides were processed for invoices ranging from $520,000 to $2,100,000. The internal auditor finds no after-the-fact review of overrides was performed. What is the nature of this control gap?
  13. A company's product mix is: Product A (CM ratio 55%, revenue $1,000,000), Product B (CM ratio 35%, revenue $2,000,000), Product C (CM ratio 25%, revenue $1,500,000). Total fixed costs are $1,400,000. What is the total contribution margin across all three products?
  14. Harwood Industries budgets variable manufacturing costs at $14 per unit and fixed manufacturing costs at $120,000 per month. The static budget assumed 8,000 units. Actual production was 9,500 units. What are the total costs in the flexible budget prepared at the actual production level?
  15. A company uses a 12-month rolling budget. As of January 31, the company has completed January and rolled forward. Which months are now included in the rolling budget horizon?
  16. A pharmaceutical company is subject to complex regulations from the Food and Drug Administration (FDA) regarding drug manufacturing processes. Failure to adhere to these regulations could result in significant fines, production halts, and forced recalls. This potential for loss is best described as:
  17. A project has an NPV of $85,000 at a 12% discount rate and an NPV of -$20,000 at an 18% discount rate. Using linear interpolation, what is the approximate IRR?
  18. A retail business is allocating warehouse overhead to store locations based on a driver that best reflects warehouse effort. The warehouse primarily picks, packs, and ships cartons to stores, and each carton requires similar handling time. Based on the scenario, which allocation basis is most appropriate?
  19. A manufacturing plant, Sunrise Textiles, applies variable manufacturing overhead based on direct labor-hours and tracks spending and efficiency variances. The variable overhead standard is $10.00 per labor-hour. In April, actual variable overhead was $312,000 and actual labor-hours were 29,000; standard hours allowed for actual output were 30,000. Management wants to improve budget accuracy and asks how the overhead variance should be addressed, focusing on the spending variance rather than efficiency. How should the overhead variance be addressed to improve budget accuracy?
  20. A manufacturing company, GreenField Packaging, uses standard costing and tracks material price variances by supplier. The standard price for Paper Roll is $0.80 per pound. In June, GreenField purchased 500,000 pounds at $0.86 per pound after a supplier changed freight terms from FOB destination to FOB shipping point, and the company began paying inbound freight separately. The purchasing manager asks how to respond to the unfavorable material price variance. What corrective action should be taken based on the material price variance analysis?

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