Question

1. Use the following data to find the total direct labor cost variance if the company produced 3,500 units during the period.

Direct labor standard (4 hrs. @ $7/hr.)	$	28	per unit
Actual hours worked		12,250
Actual rate per hour	$	7.50

Multiple Choice

• $6,125 unfavorable.

• $7,000 unfavorable.

• $7,000 favorable.

• $12,250 favorable.

• $6,125 favorable.

2.

Ratchet Manufacturing anticipates total sales for August, September, and October of $200,000, $210,000, and $220,500 respectively. Cash sales are normally 25% of total sales and the remaining sales are on credit. All credit sales are collected in the first month after the sale. Compute the amount of accounts receivable to be reported on the company's budgeted balance sheet for August.

Multiple Choice

• $150,000.

• $50,000.

• $157,500.

• $52,500.

• $200,000.

3.

In preparing a budgeted balance sheet, the amount for Accounts Receivable data can be derived from:

Multiple Choice

• The purchases budget and schedule of cash payments.

• The sales budget and the schedule of cash receipts.

• The capital expenditures budget and purchases budget.

• The budgeted income statement and budgeted balance sheet.

• The selling expenses budget and the schedule of cash receipts.

4.

A plan that lists the types and amounts of operating expenses expected that are not included in the selling expenses budget is a:

Multiple Choice

• General and administrative expense budget.

• Sales budget.

• Cash payments budget.

• Overhead budget.

• Selling expense budget.

5.

Cameroon Corp. manufactures and sells electric staplers for $16 each. If 10,000 units were sold in December, and management forecasts 4% growth in sales each month, the number of electric stapler sales budgeted for March should be:

Multiple Choice

• 10,000

• 11,249

• 10,400

• 10,816

• 11,000

Aloan Co. provides the following sales forecast for the next three months:

	January		February		March
Sales units	3,000		4,200		5,000

The company wants to end each month with ending finished goods inventory equal to 10% of the next month’s sales. Finished goods inventory on December 31 is 300 units. The budgeted production units for February are:

Multiple Choice

• 5,000 units.

• 4,200 units.

• 4,700 units.

• 4,120 units.

• 4,280 units.

6.

Zhang Industries is preparing a cash budget for June. The company has $25,000 cash at the beginning of June and anticipates $95,000 in cash receipts and $111,290 in cash disbursements during June. The company has no loans outstanding on June 1. Compute the amount the company must borrow, if any, to maintain a $20,000 cash balance.

Multiple Choice

• $28,710.

• $12,290.

• $16,290.

• $11,290.

• $6,290.

Geneva Company manufactures dolls that are sold to various customers. The company works at full capacity for half the year to meet peak demand, and operates at 80% capacity for the other half of the year. The following information is provided:

Units produced and sold		600,000		units
Selling price	$	35	/	unit
Variable manufacturing costs	$	20	/	unit
Fixed manufacturing costs	$	1,200,000	/	yr.
Variable selling and administrative costs	$	6	/	unit
Fixed selling and administrative costs	$	950,000	/	yr.

Geneva receives a purchase order to make 5,000 dolls as a one-time event. The good news is that this order is during a period when Geneva does have excess capacity. What is the lowest selling price Geneva should accept for this purchase order?

rev: 04_24_2018_QC_CS-125342, 07_09_2018_QC_CS-130916

Multiple Choice

• $35.00

• $26.00

• $29.50

• $23.50

Answer 1

Solution 1:

Direct labor cost variance = Standard direct labor cost - Actual direct labor cost = (3500*4*$7) - (12250*$7.50)

= $6,125 favorable

Hence last option is correct.

Solution 2:

amount of accounts receivable to be reported on the company's budgeted balance sheet for August = Credit sales for august

= $200,000*75% = $150,000

Solution 3:

In preparing a budgeted balance sheet, the amount for Accounts Receivable data can be derived from "The sales budget and the schedule of cash receipts."

Hence 2nd option is correct.

Solution 4:

A plan that lists the types and amounts of operating expenses expected that are not included in the selling expenses budget is a "General and administrative expense budget."

Hence first option is correct.

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