exam 3 rev

The following data relate to direct labor costs for the current period: What is the direct labor rate variance?

$1,875.00 favorable

The following data relate to direct labor costs for the current period of Executive Inc.: What is the direct labor rate variance?

$3,000 favorable

roduction and sales estimates for June are as follows: Estimated inventory (units), June 18,000 Desired inventory (units), June 309,000 Expected sales volume (units): Area X 3,000 Area Y4,000Area Z 5,500 Unit sales price $25 The budgeted total sales for June is:

$312,500.

Cape Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending inventory is 80,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. The amount of direct material B purchased during the year is:

$1,057,400.

Production estimates for August are as follows: Estimated inventory (units), August 112,000 Desired inventory (units), August 319,000 Expected sales volume (units), August75,000 For each unit produced, the direct materials requirements are as follows: Direct material A ($5 per lb.)3 lbs. Direct material B ($15 per lb.)1/2 lb. The total direct materials purchases of materials A and B required for August production is:

$1,080,000 for A; $540,000 for B.

Answer Corporation uses standard cost system. The standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of 2,500 units of product are as follows: The amount of the direct labor time variance is:

$1,200 favorable.

The standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of 2,500 units of product are as follows: Standard Costs Direct labor 7,500 hours @ $12 Actual Costs Direct labor 7,400 hours @ $11.40 The amount of the direct labor time variance is:

$1,200 favorable.

Green Co. incurs a cost of $15 per pound to produce Product X, which it sells for $26 per pound. The company can further process Product X to produce Product Y. Product Y would sell for $30 per pound and would require an additional cost of $10 per pound to be produced. The differential cost of producing Product Y is _____.

$10 per pound

Dinkins Inc. is considering disposing of a machine with a book value of $50,000 and an estimated remaining life of five years. The old machine can be sold for $15,000. A new machine with a purchase price of $150,000 is being considered as a replacement. It will have a useful life of five years and no residual value. It is estimated that variable manufacturing costs will be reduced from $70,000 to $45,000 if the new machine is purchased. The net differential increase or decrease in cost for the e

$10,000 increase.

The standard factory overhead rate of Quaker Inc. is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows: What is the amount of the fixed factory overhead volume variance?

$10,000 unfavorable

A business is considering a cash outlay of $500,000 for the purchase of land, which it could lease for $40,000 per year. If alternative investments are available that yield a 21% return, the opportunity cost of the purchase of the land is:

$105,000.

Whiteville Co. can further process Product B to produce Product C. Product B is currently selling for $45 per pound and costs $30 per pound to produce. Product C would sell for $80 per pound and would require an additional cost of $18 per pound to produce. What is the differential cost of producing Product C?

$18 per pound

The following data relate to direct labor costs for the current period of Executive Inc.: What is the direct labor time variance?

$18,000 unfavorable

Cape Corporation sells a single product. Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending inventory is 80,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below. The amount of direct material A purchased during the year is:

$186,600.

Frogue Corporation uses a standard cost system. The following information was provided for the period that just ended: The variable factory overhead controllable variance is:

$2,100 favorable.

Based on the following information, calculate the direct materials quantity variance. Actual quantity 2,500 pounds at $6.00 Standard quantity 2,900 pounds at $5.50

$2,200 favorable

The standard fixed factory overhead rate is based on 100% capacity of 135,000 machine hours for Interile Inc. The standard costs and the actual costs of factory overhead for the production of 32,000 units during March were as follows: If there was a $70,000 unfavorable volume variance for March, what is the standard fixed factory overhead cost rate?

$2.00

In a production budget, if the number of units expected to be sold during the year is 8,000, the number of units desired in ending inventory is 470 units, and the number of units in beginning inventory is 510 units, the total production for the year is:

7,960.

Based on the following production and sales estimates for May, determine the number of units expected to be manufactured in May.

85,000 units

Which of the following formula is used to calculate direct labor rate variance?

Actual costs - (Actual hours × Standard rate)

Which of the following doesn't result in an unfavorable fixed overhead volume variance?

Increase in utility costs

Which of the following is true of a capital expenditures budget?

It summarizes plans for acquiring fixed assets.

Paul's Delivery Service is considering selling one of its smaller trucks that is no longer needed in the business. The truck originally costed $23,000 and has accumulated depreciation of $10,000. The truck can be sold for $14,000. Another company is interested in leasing the truck. It will pay $4,800 per year for three years. Paul's Delivery Service will continue to pay the taxes and license fees for the truck, but all other expenses will be paid by the lessee. Management assumes the expenses fo

Paul's Delivery Service should sell the truck because the differential loss from leasing is $500.

Which of the following processes is involved in budgeting?

Periodically comparing actual results with the goals

What cost concept used in applying the cost-plus approach to product pricing includes only total manufacturing costs in the "cost" amount to which the markup is added?

Product cost concept

Wyandott Co. produces two products. Both products pass through a firing process that is operating at full capacity and is a production bottleneck. Product A requires 2 hours of processing and has a contribution margin per unit of $60. Product B requires 1 hour of processing and has a contribution margin of $40. Which of the following provides the most accurate assessment of the situation assuming unlimited demand for each product?

Production of Product B rather than Product A will generate the maximum profitability for Wyandott.

An unfavorable time variance is caused by:

lack of enough sales orders.

It would be most appropriate to develop direct labor time standards for use in administrative activities when the activity involves:

repetitive task that produces common output.

The first budget customarily prepared as part of an entity's master budget is the:

sales budget.

The revenue that is forgone from an alternative use of an asset is called a(n):

opportunity cost.

If the price paid per unit differs from the standard price per unit for direct materials, the variance is termed:

price variance.

In computing _____, output is measured as the percentage of units from a process that pass inspection.

process yield

A budget that provides the starting point for the preparation of a direct labor cost budget is the:

production budget.

Target costing is arrived at by:

taking the selling price and subtracting desired profit.

The markup determined by management should be sufficient to earn:

the desired profit plus cover any costs and expenses that are not included in the cost amount.

Standards that can be achieved only under perfect operating conditions, such as no idle time, no machine breakdowns, and no materials spoilage, are called:

theoretical standards.

If the actual direct labor hours spent producing a commodity differ from the standard hours, the variance is termed:

time variance.

In using the variable cost concept of applying the cost-plus approach to product pricing, what is included in the markup?

total fixed manufacturing costs, total fixed selling and administrative expenses, and desired profit

Nyt Garments Co.'s static budget at 10,000 units of production includes $30,000 for direct material and $5,000 for electric power. Total fixed costs are $31,000. At 12,000 units of production, a flexible budget would show:

variable costs of $42,000 and $31,000 of fixed costs.

A business is considering a cash outlay of $880,000 for the purchase of land, which it intends to lease for $200,000 per year. If alternative investments are available that yield a 15% return, the opportunity cost of the purchase of the land is:

$132,000.

As of January 1 of the current year, the Butner Company had accounts receivables of $50,000. Sales for January, February, and March were as follows: $120,000, $140,000, and $150,000. 20% of each month's sales are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. What is the total cash collected (both from accounts receivable and for cash sales) in the month of February?

$133,600

Benjamin Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $300,000, and $420,000, respectively, for September, October, and November. The company expects to sell 20% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 25% in the month following the sale, and the remainder in the following month.

$140,000.

A business received an offer from an exporter for 10,000 units of product at $13.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: What is the amount of the gain or loss from acceptance of the offer?

$15,000 gain

The condensed income statement for a business for the past year is as follows: Management is considering the discontinuance of the manufacture and sale of Black at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of White. What is the amount of change in net income for the current year that will result from the discontinuance of Black?

$170,000 decrease

The condensed income statement for a business for the past year is presented as follows: Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. What is the amount of change in net income for the current year that will result from the discontinuance of Product G?

$20,000 decrease

Benjamin Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $300,000, and $420,000, respectively, for September, October, and November. The company expects to sell 20% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale, 25% in the month following the sale, and the remainder in the following month. The cash collections from accounts receivable in October

$218,000.

The following data relate to direct labor costs for the current period: What is the direct labor time variance?

$23,500 favorable

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: What is the amount of the fixed factory overhead volume variance?

$26,000 unfavorable

Granger Co. can further process Product B to produce Product C. Product B is currently selling for $55 per pound and costs $42 per pound to produce. Product C would sell for $82 per pound and would require an additional cost of $13 per pound to produce. What is the differential revenue of producing and selling Product C?

$27 per pound

Red Co. uses the product cost concept of applying the cost-plus approach to product pricing. Given below is cost information for the production and sale of 40,000 units of its sole product. Red Co. desires a profit equal to a 15% rate of return on invested assets of $1,200,000. Fixed factory overhead cost $80,000.00 Fixed selling and administrative costs 140,000.00 Variable direct materials cost per unit 7.00 Variable direct labor cost per unit 11.00 Variable factory overhead cost per

$33.

A business is considering a cash outlay of $200,000 for the purchase of land, which it could lease for $35,000 per year. If alternative investments are available that yield an 18% return, the opportunity cost of the purchase of the land is:

$36,000.

Blue Lights Co. uses the total cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,000 units are as follows: If the total cost markup percentage per unit is 5.5%, determine the selling price per unit of the company's product.

$365

A business is considering a cash outlay of $250,000 for the purchase of land, which it intends to lease for $40,000 per year. If alternative investments are available that yield a 15% return, the opportunity cost of the purchase of the land is:

$37,500.

Green Co. incurs a cost of $15 per pound to produce Product X, which it sells for $26 per pound. The company can further process Product X to produce Product Y. Product Y would sell for $30 per pound and would require an additional cost of $10 per pound to be produced. The differential revenue of producing Product Y is _____.

$4 per pound

Answer Corporation uses standard cost system. The standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of 2,500 units of product are as follows: The amount of the direct labor rate variance is:

$4,440 favorable.

Efficient Corporation uses a standard cost system. The following information was provided for the period that just ended: The direct materials cost variance is:

$4,750 unfavorable.

Frank Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $25 unit. The unit cost for Frank Co. to make the part is $30, which includes $3 of fixed costs. If 20,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it?

$40,000 increase

Assume that Vivid Co. is considering disposing of equipment that cost $350,000 and has $280,000 of accumulated depreciation to date. Vivid Co. can sell the equipment through a broker for $135,000 less 5% commission. Alternatively, Comet Co. has offered to lease the equipment for five years for a total of $235,000. Vivid will incur repair, insurance, and property tax expenses estimated at $60,000. At lease-end, the equipment is expected to have no residual value. The net differential income from

$46,750.

Below is budgeted production and sales information for Octofic Cans, Inc. for the month of March: The unit selling price for aluminum cans is $0.15 and for tin cans is $0.20. Budgeted production for aluminum cans during the month is:

508,000 units.

Based on the following information, calculate the overall process yield.

56.76%

Standard Corporation uses a standard cost system. The following information was provided for the period that just ended: The fixed factory overhead volume variance is:

$6,000 unfavorable.

Frogue Corporation uses a standard cost system. The following information was provided for the period that just ended: The direct materials cost variance is:

$6,500 favorable.

For February, sales revenue is $300,000, sales commissions are 5% of sales, the sales manager's salary is $40,000, advertising expenses are $13,000, shipping expenses total 1% of sales, and miscellaneous selling expenses are $1,100 plus 1/2 of 1% of sales. Total selling expenses for the month of February are:

$73,600.

Alia Co. can further process Product X to produce Product Y. Product X is currently selling for $20 per pound and costs $15 per pound to produce. Product Y would sell for $30 per pound and would require an additional cost of $8 per pound to produce. What is the differential cost of producing Product Y?

$8 per pound

The condensed income statement for a business for the past year is as follows: Management is considering the discontinuance of the manufacture and sale of Product A at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product B. What is the amount of change in net income for the current year that will result from the discontinuance of Product A?

$80,000 decrease

Question Content Area Following is the information about Standard Inc.The standard costs and actual costs for direct materials, direct labor, and factory overhead for the manufacture of 2,500 units of product are as follows: The amount of the direct materials quantity variance is:

$800 unfavorable.

Frogue Corporation uses a standard cost system. The following information was provided for the period that just ended: The direct labor cost variance is:

$820 favorable.

Frogue Corporation uses a standard cost system. The following information was provided for the period that just ended: The total factory overhead cost variance is:

$9,900 unfavorable.

The formula to compute direct labor time variance is:

(actual hours × standard rate) - standard costs.

The formula to compute direct material quantity variance is:

(actual quantity × standard price) - standard costs.

Based on the following information, calculate the direct labor rate variance. Actual rate 2,500 hours at $15.00 Standard rate 2,650 hours at $15.50

1,250 favorable

Below is budgeted production and sales information for Octofic Cans, Inc. for the month of March: The unit selling price for aluminum cans is $0.15 and for tin cans is $0.20. Budgeted production for tin cans during the month is:

108,000 units.

Blue Lights Co. uses the total cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 7,700 units are as follows: If the amount of desired profit is $285,000, calculate the total cost markup percentage per unit. (Round answer to two decimal places)

11.10%

Production estimates for August are as follows: Estimated inventory (units), August 13,000 Desired inventory (units), August 312,000 Expected sales volume (units), August 40,000 For each unit produced, the direct materials requirements are as follows: Direct material A ($2 per lb.) 5 lbs. Direct material B ($11 per lb.) 1 lb. The number of pounds of materials A and B required for August production is:

195,000 lbs. of A; 39,000 lbs. of B.

Production and sales estimates for May for the Hudson Co. are as follows: The number of units expected to be sold in May is:

20,200.

If the expected sales volume for the current period is 25,000 units, the desired ending inventory is 700 units, and the beginning inventory is 450 units, the number of units set forth in the production budget, representing total production for the current period, is:

25,250 units.

Production estimates for July are as follows: For each unit produced 4 hours of direct labor is required. The labor rate per hour is $15. The number of direct labor hours required for July production is:

31,900.

A hotel has 50 suites in total, and the number of booked suites for the month of April is 20. Calculate the occupancy rate of suites of the hotel.

40%

Red Co. uses the product cost concept of applying the cost-plus approach to product pricing. Below is cost information for the production and sale of 40,000 units of its sole product. Red Co. desires a profit equal to a 15% rate of return on invested assets of $1,200,000. Fixed factory overhead cost$80,000.00 Fixed selling and administrative costs 140,000.00 Variable direct materials cost per unit 7.00 Variable direct labor cost per unit 11.00 Variable factory overhead cost per unit 3.00 Variab

43.50%

Which of the following formulas is used to compute utilization rate?

Service units used / Available service units

_____ is a method of setting prices that combines market-based pricing with a cost-reduction emphasis.

Target costing

What is a production constraint?

The point in the manufacturing process where the demand for the company's products exceeds its ability to produce the products

Defense contractors would be more likely to use which of the following cost concepts in pricing their product?

Total cost

In using the total cost concept of applying the cost-plus approach to product pricing, what is included in the cost amount to which the markup is added?

Total costs of manufacturing a product plus selling and administrative expenses

Which of the following formulas is used to calculate process yield?

Units passing inspection / Units entering process

Soap Company manufactures Soap X and Soap Y and can sell all it can make of either. Hours available to produce the products is the constrained resources. Based on the following data, which statement is true?

X and Y are equally profitable.

Managers plan _____ in a budget in order to provide a cushion for unexpected events or improve the appearance of operations.

budgetary slack

The _____ estimates the expected receipts and payments of cash for a period of time.

cash budget

A variant of fiscal-year budgeting whereby a twelve-month projection into the future is maintained at all times is termed:

continuous budgeting.

The amount of increase or decrease in cost that is expected from a particular course of action as compared to an alternative is termed:

differential cost.

The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is termed:

differential revenue.

Microgen Company static budget for 12,000 units of production includes $48,000 for direct materials, $36,000 for direct labor, utilities of $6,000, and supervisor salaries of $18,000. A flexible budget for 14,000 units of production would show:

direct materials of $56,000, direct labor of $42,000, utilities of $7,000, and supervisor salaries of $18,000.

Lack of enough sales orders to keep a factory operating at normal capacity results in an unfavorable:

fixed factory overhead volume variance.

The _____ budget shows the expected results of a responsibility center for several activity levels.

flexible

The _____ is an integrated set of operating, investing, and financing budgets for a period of time.

master budget