CPA BAR Practice Exam 3

Orion Manufacturing provides the following financial data for the current year:<br/><br/>- Net Sales: $5,000,000<br/>- Cost of Goods Sold: $3,500,000<br/>- Average Accounts Receivable: $450,000<br/>- Average Inventory: $600,000<br/>- Average Accounts Payable: $320,000<br/><br/>Management is considering a new vendor agreement that would increase the average accounts payable to $400,000 but would require a price increase on raw materials, raising Cost of Goods Sold by $100,000 (assuming sales price and volume remain constant). What would be the net impact on the Cash Conversion Cycle (CCC)? (Assume a 365-day year).

A manufacturing company uses a standard cost system. For the month of June, the following data is available regarding variable overhead:<br/><br/>- Actual Variable Overhead: $185,000<br/>- Actual Machine Hours Worked: 22,000 hours<br/>- Standard Machine Hours Allowed for Actual Production: 20,000 hours<br/>- Standard Variable Overhead Rate: $8 per machine hour<br/><br/>What is the Variable Overhead Efficiency Variance for June?

A financial analyst is reviewing a company's sales data using a visualization tool. The scatter plot of monthly advertising expense (x-axis) versus sales revenue (y-axis) shows a tight cluster of points rising from left to right, but one data point for December is located far above the cluster. Which of the following is the MOST appropriate interpretation and next step?

TechStart Inc. reports Net Income of $500,000. The income statement includes:<br/>- Depreciation & Amortization: $120,000<br/>- Interest Expense: $80,000<br/>- Income Tax Expense: $150,000<br/>- Stock-based Compensation: $50,000<br/>- Gain on Sale of Equipment: $20,000<br/>- Unrealized Loss on Available-for-Sale Securities (OCI): $10,000<br/><br/>Calculate the Adjusted EBITDA, assuming management defines it as EBITDA adjusted for non-cash stock compensation and non-recurring gains/losses.

A company produces two products, A and B. Under its traditional costing method, the company allocates overhead based on direct labor hours. Product A is a high-volume, simple product, while Product B is a low-volume, complex product. If the company switches to Activity-Based Costing (ABC), which of the following effects is MOST likely to occur?