c exam 3

Which of the following could be a reason for a favorable material price variance? A) the purchasing manager bargaining effectively with suppliers B) the purchasing manager giving orders for small quantity to reduce storage cost C) the purchasing manager accepting a bid from the highest-priced supplier to ensure the quality of material D) the personnel manager hiring underskilled workers

A

Harbor Corp currently leases a corporate suite in an office building for a cost of $360,000 a year. Only 80% of the corporate suite is currently being used. A start-up business has proposed a plan that would use the other 20% of the suite and increase the overall costs of maintaining the space by $20,484. If the incremental method were used, what amount of cost would be allocated to the start-up business? A) $20,484 B) $380,484 C) $76,097 D) $88,387

a

Hockey Accessories Corporation manufactured 23,000 duffle bags during March. The following fixed overhead data pertain to March: ​Actual​Static Budget Production​23,000 units​23,500 units Machine-hours​13,100 hours​14,100 hours Fixed overhead cost for March​$626,100​$634,500 What is the amount of fixed overhead allocated to production? A) $621,000 B) $634,500 C) $639,711 D) $612,779

a

Lincoln Corporation used the following data to evaluate their current operating system. The company sells items for $19 each and used a budgeted selling price of $19 per unit. ​ Actual​ Budgeted ​Units sold​48,000 units​39,000 units ​Variable costs​$167,000​$152,000 ​Fixed costs​$41,000​$50,000 What is the static-budget variance of revenues? A) $171,000 favorable B) $171,000 unfavorable C) $6,000 favorable D) $9,000 unfavorable

a

The variable overhead spending variance measures the difference between ________, multiplied by the actual quantity of variable overhead cost-allocation base used. A) the actual variable overhead cost per unit and the budgeted variable overhead cost per unit B) the standard variable overhead cost rate and the budgeted variable overhead cost rate C) the actual variable overhead cost per unit and the budgeted fixed overhead cost per unit D) the actual quantity per unit and the budgeted quantity per unit

a

Under absorption costing, if a manager's bonus is tied to operating income, then increasing inventory levels compared to last year would result in ________. A) greater operating income and therefore increasing the manager's bonus B) less operating income and therefore decreasing the manager's bonus C) not affecting the manager's bonus D) being unable to determine the manager's bonus using only the above information

a

A master budget is ________. A) a budget which starts from a zero base B) based on the level of expected output at the start of the budget period C) developed at the end of a period D) a type of flexible budget once actual results are known

b

Castleton Corporation manufactured 36,000 units during March. The following fixed overhead data relates to March: ​Actual​Static Budget Production​36,000 units​34,000 units Machine-hours​6,960 hours​6,800 hours Fixed overhead costs for March​$164,700​$156,400 What is the flexible-budget amount? A) $170,379.31 B) $156,400.00 C) $165,600.00 D) $164,700.00

b

Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container. ​Budgeted quantity​Budgeted price ​Direct materials​0.40 pounds​$20 per pound ​Direct labor​0.80 hours​$15 per hour During July, GII produced and sold 4,000 containers using 1,700 pounds of direct materials at an average cost per pound of $15 and 3,225 direct manufacturing labor hours at an average wage of $15.25 per hour. The direct material price variance during July is ________. A) $20,000 unfavorable B) $8,500 favorable C) $8,500 unfavorable D) $2,000 unfavorable

b

Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $200,000 are allocated based on the number of employees. The costs of operating departments A and B are $208,000 and $312,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: ​Production ​Support Departments​Departments​ Maintenance Department Personnel Department A B Budgeted costs $320,000 $200,000 $208,000 $312,000 Budgeted maintenance-hours NA 860 1230 690 Number of employees 50 NA 270 630 Using the step-down method, what amount of Maintenance Department cost will be allocated to Department B if the service department with the highest percentage of interdepartmental support service is allocated first? (Do not round any intermediary calculations.) A) $31,079 B) $79,424 C) $49,640 D) $88,489

b

Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $360,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $110,000 are allocated based on the number of employees. The costs of operating departments A and B are $188,000 and $282,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: ​Production ​Support Departments​Departments​ Maintenance Department Personnel Department A B Budgeted costs $360,000 $110,000 $188,000 $282,000 Budgeted maintenance-hours NA 880 1230 680 Number of employees 60 NA 290 630 Using the direct method, what amount of Maintenance Department costs will be allocated to Department B? (Do not round any intermediary calculations.) A) $100,398 B) $128,168 C) $87,742 D) $167,330

b

The dual-rate cost-allocation method classifies costs in each cost pool into a ________. A) budgeted-cost pool and an actual-cost pool B) variable-cost pool and a fixed-cost pool C) direct-cost pool and an indirect-cost pool D) direct-cost pool and a reciprocal-cost pool

b

Which of the following costs will be treated as period costs under absorption costing? A) raw materials used in the production B) sales commission paid on sale of product C) depreciation on factory equipment D) rent for factory building

b

Which of the following journal entries is used to record fixed overhead costs allocated? A) Fixed Overhead Allocated ​Work-in-Process Control B) Work-in-Process Control ​Fixed Overhead Allocated C) Fixed Overhead Control ​Work-in-Process Control D) Fixed Overhead Allocated ​Fixed Overhead Control

b

18) ________ is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs. A) Variable costing B) Mixed costing C) Absorption costing D) Standard costing

c

AAA Manufacturing Inc, makes a product with the following costs per unit: Direct materials $180 Direct labor $20 Manufacturing overhead (variable) $30 Manufacturing overhead (fixed) $130 Marketing costs $75 What would be the inventoriable cost per unit under variable costing and what would it be under absorption costing? A) $180 for variable costing and $305 under absorption costing B) $230 for variable costing and $305 under absorption costing C) $230 for variable costing and $360 under absorption costing D) $200 for variable costing and $305 under absorption costing

c

An unfavorable variance indicates that ________. A) the actual costs are less than the budgeted costs B) the actual revenues exceed the budgeted revenues C) the actual units sold are less than the budgeted units D) the budgeted contribution margin is more than the actual amount

c

Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container. ​Budgeted quantity​Budgeted price ​Direct materials​0.60 pounds​$20 per pound ​Direct labor​0.30 hours​$14 per hour During July, GII produced and sold 4,000 containers using 2,700 pounds of direct materials at an average cost per pound of $19 and 1,290 direct manufacturing labor hours at an average wage of $14.30 per hour. The direct manufacturing labor flexible-budget variance during July is ________. A) $1,260.00 unfavorable B) $900.00 favorable C) $1,647.00 unfavorable D) $3,300.00 favorable

c

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, AII estimated the following standard costs for one of their major products, the 10-gallon plastic container. ​Budgeted quantity​Budgeted price ​Direct materials​0.80 pounds​$60 per pound ​Direct labor​0.10 hours​$20 per hour During June, Heavy Products produced and sold 15,000 containers using 25,000 pounds of direct materials at an average cost per pound of $64 and 12,000 direct manufacturing labor-hours at an average wage of $21.56 per hour. June's direct material flexible-budget variance is ________. A) $60,000 unfavorable B) $100,000 favorable C) $880,000 unfavorable D) $18,720 favorable

c

Hugo, owner of Automated Fabric, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis: Budgeted manufacturing overhead costs: ​Maintenance​M (Support Dept)​$400,000 ​Personnel​P (Support Dept)​$150,000 ​Weaving​W (Weaving Dept)​$620,000 ​Colorizing​C (Colorizing Dept)​$360,000 Services furnished: By Maintenance (budgeted labor-hours): ​to Personnel​1000 ​to Weaving​8000 ​to Colorizing​4100 By Personnel (Number of employees serviced): ​Plant Maintenance​12 ​Weaving​36 ​Colorizing​23 Which of the following linear equations represents the complete reciprocated cost of the Personnel Department? A) P = $400,000 - $150,000 (1000 / 13,100) M B) P = (1000 / 13,100) M C) P = $150,000 + (1000 / 13,100) M D) P = $150,000

c

Jean Peck's Furniture manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $400 after negotiations. In the month of January, it manufactures 3,200 tables and sells 2,400 tables. Actual fixed costs are the same as the amount of fixed costs budgeted for the month. The following information is provided for the month of January: ​Variable manufacturing costs​$130 per unit​ ​Fixed manufacturing costs​$90,000 per month ​Fixed Administrative expenses​$30,000 per month At the end of the month Jean Peck's Furniture has an ending inventory of finished goods of 800 units. The company also incurs a sales commission of $11 per unit. What is the cost of goods sold per unit when using absorption costing? A) $130.00 B) $101.87 C) $158.13 D) $169.13

c

Lazy Guy Corporation manufactured 4,000 chairs during June. The following variable overhead data relates to June: Budgeted variable overhead cost per unit​$10.00 Actual variable manufacturing overhead cost​$49,000 Flexible-budget amount for variable manufacturing overhead​$46,800 Variable manufacturing overhead efficiency variance​$720 unfavorable What is the variable overhead flexible-budget variance? A) $2,200 favorable B) $1,480 favorable C) $2,200 unfavorable D) $1,480 unfavorable

c

Lincoln Corporation used the following data to evaluate their current operating system. The company sells items for $18 each and used a budgeted selling price of $18 per unit. ​ Actual​ Budgeted ​Units sold​43,000 units​33,000 units ​Variable costs​$166,000​$150,000 ​Fixed costs​$41,000​$58,000 What is the static-budget variance of operating income? A) $164,000 favorable B) $164,000 unfavorable C) $181,000 favorable D) $181,000 unfavorable

c

Many companies have switched from absorption costing to variable costing for internal reporting ________. A) to comply with external reporting requirements as required by GAAP B) to increase bonuses for managers C) to reduce the undesirable incentive to build up inventories that would show higher operating income D) so the denominator level is more accurate

c

Really Great Corporation manufactures industrial-sized landscaping trailers and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data: Budgeted output units​40,000 units Budgeted machine-hours​10,000 hours Budgeted variable manufacturing overhead costs for 40,000 units​$310,000 Actual output units produced​36,500 units Actual machine-hours used​14,600 hours Actual variable manufacturing overhead costs​$350,400 What is the budgeted variable overhead cost rate per output unit? A) $9.60 B) $12.40 C) $7.75 D) $31.00

c

Standard material cost per kg of raw material is $6.50. Standard material allowed per unit is 5 Kg. Actual material used per unit is 6.00 Kg. Actual cost per kg is $6.00. What is the standard cost per output unit? A) $30.00 B) $36.00 C) $32.50 D) $39.00

c

Which of the following would be the case under the stand-alone method of allocating common costs? A) the individual users of a cost object are ranked in the order of users least responsible for the common cost and then uses this ranking to allocate cost among those users B) disputes can arise over who is the primary user C) each party bears a proportionate share of the total costs in relation to their individual stand-alone costs D) the individual users of a cost object are ranked in the order of users most responsible for the common cost and then uses this ranking to allocate cost among those users

c

Lazy Guy Corporation manufactured 6,000 chairs during June. The following variable overhead data relates to June: Budgeted variable overhead cost per unit​$10.00 Actual variable manufacturing overhead cost​$52,800 Flexible-budget amount for variable manufacturing overhead​$46,900 Variable manufacturing overhead efficiency variance​$790 unfavorable What is the variable overhead spending variance? A) $5,110 favorable B) $5,900 favorable C) $5,900 unfavorable D) $5,110 unfavorable

d

Swan Textiles Inc. produces and sells a decorative pillow for $98.00 per unit. In the first month of operation, 2,200 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: ​Variable manufacturing costs​$22.00 per unit ​Variable marketing costs​$3.90 per unit ​Fixed manufacturing costs​$14 per unit ​Administrative expenses, all fixed​$19.50 per unit ​Ending inventories: ​Direct materials​-0- ​WIP​-0- ​Finished goods​400 units What is the operating income using variable costing? A) $129,780 B) $69,480 C) $104,580 D) $56,080

d

The Speedjet Aircraft Corporation has a central materials laboratory. The laboratory has only two users, the Large Plane Department and the Small Plane Department. The following data apply to the coming budget year: Budgeted costs of operating the materials laboratory for 100,000 to 200,000 technician hours per year: ​Fixed costs per year​$8,200,000 ​Variable costs​$74​ per technician hour Budgeted long-run usage in hours per year: ​Large Plane Department​90,000​ technician hours ​Small Plane Department​110,000​ technician hours Budgeted amounts are used to calculate the allocation rates. Actual usage for the year by the Large Plane Department was 70,000 technician hours and by the Small Plane Department was 80,000 technician hours. If a dual-rate cost-allocation method is used, what amount of materials laboratory costs will be budgeted for the Small Plane Department? A) $14,153,333 B) $10,293,333 C) $9,200,000 D) $12,650,000

d

The actual information pertains to the month of June. As part of the budgeting process, Colonial Fencing Company developed the following static budget for September. Colonial is in the process of preparing the flexible budget and understanding the results. ​Actual​Flexible​Static ​Results​Budget​Budget Sales volume (in units)​19,000​​​20,500 Sales revenues​$510,000​$​$615,000 Variable costs​256,000​$ ________​300,000 Contribution margin​$254,000​$​315,000 Fixed costs​235,000​$ ________​228,000 Operating profit​$19,000​$ ​​$87,000 The flexible budget for sales revenues will be? A) $615,000 B) $510,000 C) $635,500 D) $570,000

d

Under the incremental method of allocating common costs ________. A) the parties are interested in being viewed as primary users B) each party bears a proportionate share of the total costs in relation to their individual stand-alone costs C) the first-incremental user bears a higher proportion of the cost in comparison with the primary user D) the primary user bears the maximum of the total cost

d