question 1. part a. Memory chips in a computer assembly plant

1. Variable
2. Fixed
3. Mixed
4. Step

part b. Salary of the department manager

1. Variable
2. Fixed
3. Mixed
4. Step

note: for part a and b, choose the costs of all as variable, fixed, mixed, or step. Sales volume is the cost driver.

part c. When the bond stated interest rate (coupon rate) exceeds the market rate, the bonds are issued at

A) Par value

B) Discount

C) Premium

D) Cannot be determined

part d. A stockholder has filed a lawsuit against Fischer Corporation. Fischers attorneys have reviewed the facts of the case. Their review revealed that similar lawsuits have never resulted in a cash award and it is highly unlikely that this lawsuit will either. Please indicate the treatment of this situation.

1. Record an accounts receivable on the balance sheet.
2. Record an accounts payable on the balance sheet.
3. Record a contingent liability on the balance sheet and disclose the liability in a financial statement footnote
4. Neither record nor disclose any liability

part e. Which of the following corporate credit ratings are ordered in terms of increasing default risk (meaning from the highest rating to the lowest rating)?

A) AAA, A, BB, C

B) A, AAA, BB, C

C) BB, C, A, AAA

D) C, BB, A, AAA

part f) For each of the following situations, which is NOT reported as a liability on the balance sheet of Bloomington Inc. at December 31, 2016.

1. Bloomington owes $240,000 at year-end 2016 for inventory purchase.
2. Bloomington agreed to purchase a $30,000 drill press in January 2017 (has not purchased yet).
3. During November and December of 2016, Bloomington sold products to a customer and warranted them against product failure for 90 days. Estimated costs of honoring this 90-day warranty during 2017 are $5,100.
4. Bloomington provides a profit-sharing bonus for its executive equal to 5% of reported pretax annual income. The estimated pretax income for 2016 is $900,000. Bonuses are not paid until January of the following year.