Question

1.)

Based on a predicted level of production and sales of 29,000 units, a company anticipates total variable costs of $113,100, fixed costs of $29,000, and operating income of $203,580. Based on this information, the budgeted amount of fixed costs for 26,000 units would be:

Multiple Choice

• $159,400.

• $232,580.

• $29,000.

• $113,100

• $101,400

2.)

Product A has a sales price of $21 per unit. Based on a 12,000-unit production level, the variable costs are $9 per unit and the fixed costs are $8 per unit. Using a flexible budget for 14,500 units, what is the budgeted operating income from Product A?

Multiple Choice

• $14,500.

• $78,000.

• $96,000.

• $22,500.

• $52,500.

3.)

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials quantity variance is:

Direct materials standard (7 kg. @ $2.50/kg)	$17.50	per finished unit
Actual cost of materials purchased	$423,500
Actual direct materials purchased and used	160,000	kg

Multiple Choice

• $14,000 unfavorable.

• $37,500 unfavorable.

• $37,500 favorable.

• $23,500 unfavorable.

• $23,500 favorable.

4.)

Georgia, Inc. has collected the following data on one of its products. The direct materials quantity variance is:

Direct materials standard (3 lbs @ $1/lb)	$3	per finished unit
Total direct materials cost variance—unfavorable	$19,250
Actual direct materials used	140,000	lbs.
Actual finished units produced	35,000	units

Multiple Choice

• $15,750 favorable.

• $35,000 unfavorable.

• $35,000 favorable.

• $19,250 unfavorable.

• $19,250 favorable.

5.)

Grant Co. uses the following standard to produce a single unit of its product: Variable overhead (1.40 hrs. per unit @ $3.90/hr.) Actual data for the month show total variable overhead costs of $150,260, and 26,000 units produced. The total variable overhead variance is:

Multiple Choice

• $8,300F.

• $8,300U.

• $76,900U.

• $76,900F.

• $0.

6.)

The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $44 per pound. In manufacturing 6,600 units, 37,500 pounds of material were used at a cost of $46 per pound. What is the direct materials quantity variance?

Multiple Choice

• $75,000 unfavorable.

• $75,000 favorable.

• $92,400 unfavorable.

• $92,400 favorable.

• $17,400 favorable.

7.)

laymore Corp. has the following information about its standards and production activity for September. The volume variance is:

Actual total factory overhead incurred	$	29,620
Standard factory overhead:
Variable overhead	$	5.90		per unit produced
Fixed overhead
($7,740 / 4,300 estimated units to be produced)	$	1.80		per unit
Actual units produced		3,200		units

Multiple Choice

• $3,000U.

• $3,000F.

• $1,980U.

• $1,980F.

• $4,980U.

8.)

Milltown Company specializes in selling used cars. During the month, the dealership sold 24 cars at an average price of $15,200 each. The budget for the month was to sell 22 cars at an average price of $16,200. Compute the dealership's sales volume variance for the month.

Multiple Choice

• $24,000 unfavorable.

• $10,200 favorable.

• $24,000 favorable.

• $32,400 unfavorable.

• $32,400 favorable.

9.)

Brownley Company has two service departments and two operating (production) departments. The Payroll Department services all three of the other departments in proportion to the number of employees in each. The Maintenance Department costs are allocated to the two operating departments in proportion to the floor space used by each. Listed below are the operating data for the current period:

	Service Depts.							Production Depts.
	Payroll			Maintenance				Cutting			Assembly
Direct costs	$	40,400		$	45,500			$	96,500		$	125,400
No. of personnel					35				35			105
Sq. ft. of space									12,000			17,000

The total cost of operating the Maintenance Department for the current period is:

Multiple Choice

• $26,280.

• $30,251.

• $45,500.

• $53,580.

• $46,751.

10.)

The Menswear Department of Major's Department Store had sales of $203,000, cost of goods sold of $140,000, indirect expenses of $14,750, and direct expenses of $29,000 for the current period. The Menswear Department's contribution to overhead as a percent of sales is:

Multiple Choice

• 85.71%.

• 31.03%.

• 16.75%.

• 68.75%.

• 9.48%.

Answer 1

1)

Fixed costs of producing 29,000 units = $29,000

Budgeted amount of fixed costs for 26,000 units would be = $29,000

Total fixed costs are not affected by the change in the volume of output. Hence, fixed costs of producing 26,000 units would be same as fixed costs of producing 29,000 units.

Correct option is (c)

2)

Budgeted fixed costs = Budgeted output x Fixed cost per unit

= 12,000 x 8

= $96,000

Sales (14,500 x 21)	304,500
Less: Variable costs (14,500 x 9)	- 130,500
Less: Fixed costs	- 96,000
Operating income	$78,000

Budgeted operating income from Product A = $78,000

Correct option is (b)

3)

Standard quantity = 7 kg. per unit

Actual output = 25,000 units

Hence, standard quantity for actual output = 25,000 x 7

= 175,000 kg

Direct material quantity variance = Standard price x (Standard quantity - Actual quantity)

= 2.5 x (175,000 - 160,000)     

= $37,500 (Favorable)

Correct option is (c)

4)

Standard quantity = 3 lb per unit

Actual output = 35,000 units

Hence, standard quantity for actual output = 35,000 x 3

= 105,000 lb

Direct material quantity variance = Standard price x (Standard quantity - Actual quantity)

= 1 x (105,000 - 140,000)

= $35,000 (Unfavorable)

Correct option is (b)

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