CPA BAR Practice Exam 4

Orion Corp. is analyzing its working capital efficiency. For the current year, Orion reported the following data:<br/>- Cost of Goods Sold: $12,000,000<br/>- Average Inventory: $2,000,000<br/>- Net Credit Sales: $18,000,000<br/>- Average Accounts Receivable: $1,500,000<br/>- Purchases: $12,500,000<br/>- Average Accounts Payable: $1,250,000<br/><br/>Management is considering a new vendor policy that would increase the average accounts payable to $1,800,000 without changing purchase volume or cost. Assuming all other factors remain constant, what would be the impact on Orion's Cash Conversion Cycle (CCC)?

A company is analyzing its gross margin variance. The budgeted data for the quarter indicated sales of 10,000 units at $50 per unit with a standard cost of $30 per unit. Actual results showed sales of 11,000 units at $48 per unit with an actual cost of $32 per unit.<br/><br/>Which of the following correctly identifies the sales price variance and the sales volume variance?

TechSolutions Inc. reports the following financial data:<br/>- Net Income: $5,000,000<br/>- Interest Expense: $800,000<br/>- Income Tax Expense: $1,200,000<br/>- Depreciation Expense: $1,500,000<br/>- Amortization Expense: $500,000<br/>- Stock-based Compensation: $300,000<br/>- Capital Expenditures: $2,000,000<br/>- Increase in Working Capital: $400,000<br/><br/>Calculate the company's Free Cash Flow (FCF) to the Firm, assuming the tax rate is 25%.

Manufacturing Corp. uses Activity-Based Costing (ABC). The company has identified two cost pools: Machining (driven by machine hours) and Inspection (driven by number of inspections). <br/>- Budgeted Machining Costs: $500,000; Budgeted Machine Hours: 50,000.<br/>- Budgeted Inspection Costs: $200,000; Budgeted Inspections: 2,000.<br/><br/>Product X requires 10,000 machine hours and 500 inspections. Under traditional costing based solely on machine hours, the overhead allocated to Product X was $140,000. <br/><br/>What is the difference in overhead allocated to Product X using ABC compared to traditional costing?

During the current month, a company purchased 20,000 pounds of raw material for $42,000. The standard price for the material is $2.00 per pound. The company used 18,000 pounds in production, while the standard quantity allowed for the actual output was 17,500 pounds.<br/><br/>What is the Direct Materials Purchase Price Variance and the Direct Materials Usage Variance?