Which of the following statements is true concerning the basic accounting treatment of a partnership?

• A.The basis for sharing net incomes or net kisses must be fixed.
• B.The ownership ratio identifies the basis for dividing net income and net toss.
• C.The initial investment of each partner should be recorded at book value.
• D.A partner's capital only changes due to net income or net loss.

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Using absorption costing, the company's operating profit was:

• A.US $750.000
• B.US $900,000 C US $975,000 D US $1,020,000

Correct Answer: B

Under absorption costing, product costs include fixed and variable manufacturing costs. The unit product cost under absorption costing is US $10 [ $600,000 + $400,000) 100,000 units produced]. All nonmanufacturing costs are expensed in the period incurred. Thus operating profit is US $900.000.

A company manufactures and sells a single product. Planned and actual production in its first year of operation was 100,000 units. Planned and actual costs for that year were as follow:

The company sold 85.000 units of product at a selling price of US $30 per unit.

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Which of the following intangible assets is considered to have an indefinite life?

• A.Copyright
• B.Land
• C.Trademark
• D.Underground oil deposits

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Response time on a local area network LAN) was so slow that programmers working on applications kept their code on their own workstations rather than on the server. As a result, daily backups of the server did not contain the current source code. The best approach to detect deteriorating response time is:

• A.Parallel testing.
• B.Integrated test facility.
• C.Performance monitoring.
• D.Program code comparison software.

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Heniser Pet Foods manufactures two products. X and Y. The unit contribution margins for Products X and Y are US $30 and US $50, respectively. Each product uses Materials A and B. Product X uses 6 pounds of Material A and 12 pounds of Material B. Product Y uses 12 pounds of Material A and 8 pounds of Material B. The company can purchase only 1,200 pounds of Material A and 1,760 pounds of Material B. The optimal mix of products to manufacture is:

• A.146 units of X and 0 units of Y.
• B.0 units of X and 100 units of Y.
• C.120 units of X and 40 units of Y.
• D.40 units of X and 120 units of Y.

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