Question

1)

Cahuilla Corporation predicts the following sales in units for the coming four months:

	April		May		June		July
Sales in Units	260		300		320		260

Each month's ending Finished Goods Inventory should be 40% of the next month's sales. March 31 Finished Goods inventory is 104 units. A finished unit requires 5 pounds of direct material B at a cost of $2.00 per pound. The March 31 Raw Materials Inventory has 220 pounds of B. Each month's ending Raw Materials Inventory should be 30% of the following month's production needs. The budgeted purchases of pounds of direct material B during May should be:

Multiple Choice

1,522 lbs.

1,078 lbs.

308 lbs.

1,984 lbs.

296 lbs.

2)

Hassock Corp. produces woven wall hangings. It takes 2 hours of direct labor to produce a single wall hanging. Hassock’s standard labor cost is $18 per hour. During August, Hassock produced 11,000 units and used 22,140 hours of direct labor at a total cost of $395,720. What is Hassock’s labor rate variance for August?

Multiple Choice

$2,782 unfavorable.

$5,582 favorable.

$2,782 favorable.

$2,800 unfavorable.

$2,800 favorable.

3)

The accountant for Crusoe Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:

Retained earnings balance at the beginning of the year	$	133,000
Cash dividends declared for the year		53,000
Proceeds from the sale of equipment		88,000
Gain on the sale of equipment		8,400
Cash dividends payable at the beginning of the year		25,000
Cash dividends payable at the end of the year		28,400
Net income for the year		99,000

The amount of cash dividends paid during the year would be:

Multiple Choice

$49,600.

$290,000.

$262,000.

$188,000.

$266,600.

4)

Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months:

		January		February		March
Material purchases		$ 12,580		14,690		11,510

Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase. The December Accounts Payable balance is $6,900. The expected January 31 Accounts Payable balance is:

Multiple Choice

$7,345.

$9,740.

$6,290.

$6,900.

$12,580.

5)

Cavern Company's output for the current period results in a $5,900 unfavorable direct material price variance. The actual price per pound is $60.00 and the standard price per pound is $58.00. How many pounds of material are used in the current period?

Multiple Choice

8,850.

5,900.

8,752.

2,950.

2,852.

Answer 1

1
	May	June
Sales in Units	300	320
Add: Desired Ending Finished Goods Inventory	128	104
Less: Beginning Finished Goods Inventory	-120	-128
Budgeted production	308	296
	May
Budgeted production	308
X Pounds of direct material per unit	5
Total materials for production	1540
Add: Desired Ending Raw materials Inventory	444	=296*5*30%
Less: Beginning Raw materials Inventory	-462	=1540*30%
Budgeted purchases of pounds of direct material B	1522
Option 1 1,522 lbs is correct
2
Labor rate variance for August = 395720-(22140*18)= $2,800 favorable
Option 5 $2,800 favorable is correct
3
Cash dividends payable at the beginning of the year	25000
Add: Cash dividends declared for the year	53000
Less: Cash dividends payable at the end of the year	-28400
Cash dividends paid during the year	49600
Option 1 $49,600 is correct
4
January 31 Accounts Payable = 12580*50% = $6290
Option 3 $6,290 is correct
5
Pounds of material used in the current period = 5900/(60-58)= 2950
Option 4 2,950 is correct