Final

Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 7,900 units, but its actual level of activity was 7,860 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for March:

(0+$18*141480) - (135850) = 5630 f

Part S51 is used in one of Haberkorn Corporation's products. The company makes 12,000 units of this part each year. The company's Accounting Department reports the following costs of producing the part at this level of activity: Per Unit Direct materials $ 6.30 Direct labor $ 5.70 Variable manufacturing overhead $ 4.80 Supervisor's salary $ 7.00 Depreciation of special equipment $ 8.60 Allocated general overhead $ 7.20 An outside supplier has offered to produce this part and sell it to the company for $37.70 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier's offer were accepted, only $17,000 of these allocated general overhead costs would be avoided. The annual financial advantage (disadvantage) for the company as a result of buying the part from the outside supplier would be:

(149800)

The Cook Corporation has two divisions--East and West. The divisions have the following revenues and expenses: East West Sales $ 595,000 $ 445,500 Variable costs 180,000. 236,500 Traceable fixed costs 144,000 203,400 Allocated common corporate costs 129,600 187,000 Net operating income (loss) $ 141,400 $ (181,400) The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the West Division would result in an overall company net operating income (loss) of:

(45600)

Sathre Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of December, it assumed that 34 wells would have been serviced. However, 32 wells were actually serviced during December. The "Employee salaries and wages" in the flexible budget for December would have been closest to:

(56400 + (900*32)) = 85200

The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 3.5 hours Standard variable overhead rate $15.20 per hour The following data pertain to operations for the last month: Actual hours 3,800 hours Actual total variable manufacturing overhead cost. $59,09 Actual output. 800 units What is the variable overhead efficiency variance for the month?

(800 *3.5)=2800. 15.20 (2800-3800)=15200 u

Hubbard Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During January, the kennel budgeted for 2,100 tenant-days, but its actual level of activity was 2,060 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for January: data used in budgeting:

(9500 (2.70*2060)= 15062

Piper Corporation's standards call for 1,000 direct labor-hours to produce 250 units of product. During October the company worked 1,250 direct labor-hours and produced 300 units. The standard hours allowed for October would be:

1200 hours [( 1000 /250=4) 4*300=1200]

Lusk Corporation produces and sells 14,100 units of Product X each month. The selling price of Product X is $23 per unit, and variable expenses are $17 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $74,000 of the $104,000 in monthly fixed expenses charged to Product X would not be avoidable even if the product was discontinued. If Product X is discontinued, the monthly financial advantage (disadvantage) for the company of eliminating this product should be:

14100*23=324300 14100*17=239700 104-74=30000 324300-239700-30000= 54600

CoolAir Corporation manufactures portable window air conditioners. CoolAir has the capacity to manufacture and sell 80,000 air conditioners each year but is currently only manufacturing and selling 60,000. The following per unit numbers relate to annual operations at 60,000 units: Per Unit Selling price $ 125 Manufacturing costs: Variable $ 25 Fixed $ 40 Selling and administrative costs: Variable $ 10 Fixed $ 15 The City of Clearwater would like to purchase 3,000 air conditioners from CoolAir but only if they can get them for $75 each. Variable selling and administrative costs on this special order will drop down to $2 per unit. This special order will not affect the 60,000 regular sales and it will not affect the total fixed costs. The annual financial advantage (disadvantage) for the company as a result of accepting this special order from the City of Clearwater should be:

144000

Magno Cereal Corporation uses a standard cost system for its "crunchy pickle" cereal. The materials standard for each batch of cereal produced is 1.4 pounds of pickles at a standard cost of $3.00 per pound. During the month of August, Magno purchased 78,000 pounds of pickles at a total cost of $253,500. Magno used all of these pickles to produce 60,000 batches of cereal. What is Magno's materials quantity variance for August?

18000 favorable (3*(78000-60000*1.4)

One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. Purchases of raw materials for February would be budgeted to be: Jan. Feb. march Sales in units 16800. 23600. 19800 Production in units 19800 20800 19700

20,580 pounds ( 28000 + [.20*19700] - [.20*20800] )= 20580

Speyer Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,110 patient-visits and the actual level of activity was 1,100 patient-visits. The cost formula for administrative expenses is $3.50 per patient-visit plus $19,500 per month. The actual administrative expense was $20,800. In the clinic's flexible budget performance report for last month, the spending variance for administrative expenses was:

2550. 20800 - ([1100*3.50]+19500) = 2550

Pooler Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.40 direct labor-hours. The direct labor rate is $8.00 per direct labor-hour. The production budget calls for producing 7,200 units in April and 6,800 units in May. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months?

44800

Feemster Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,900 units, but its actual level of activity was 5,850 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October: Data used in budgeting:

680 u

The following materials standards have been established for a particular product: Standard quantity per unit of output 4.5 meters Standard price $17.60 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 7,000 meters Actual cost of materials purchased $126,350 Actual materials used in production 6,600 meters Actual output 1,440 units What is the materials price variance for the month?

7000*(18.05-17.60) = 3150 [18.05= 126350/7000]

Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity 9,400 MHs Actual level of activity 9,600 MHs Standard variable manufacturing overhead rate $8.10 per MH Actual total variable manufacturing overhead $75,050

75050-(9600)*8.1 = 2710

Haylock Incorporated bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 5,600 direct labor-hours will be required in August. The variable overhead rate is $5.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $69,440 per month, which includes depreciation of $15,680. All other fixed manufacturing overhead costs represent current cash flows. The August cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

84000 (5600*5.40)+(69440-15680)=84000

Which of the following budgets are prepared before the sales budget? Budgeted Income statement/direct labor budget A) yes. Yes B)yes. No C)no. Yes D) no. No

D no no

There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?

It is calculated based on the sales budget and the desired ending inventory.

Which of the following would be relevant in the decision to sell or throw out obsolete inventory? Direct material cost Fixed overhead assigned to the inventory cost assigned to the inventory A) Yes Yes B) Yes No C) No Yes D) No No

No no

The general model for calculating a quantity variance is:

Standard price × (Actual quantity of inputs used − Standard quantity allowed for output).

Which of the following costs are always irrelevant in decision making?

Sunk costs

Which of the following statements is NOT correct concerning the Manufacturing Overhead Budget?

The Manufacturing Overhead Budget shows only the variable portion of manufacturing overhead.

In a flexible budget, what will happen to fixed costs as the activity level increases?

The fixed cost per unit will decrease

The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is:

Zero

When using a flexible budget, a decrease in activity within the relevant range:

decreases total costs

A budget that is based on the actual activity of a period is known as a:

flexible budget

When preparing a direct materials budget, the required purchases of raw materials in units equals:

raw materials needed to meet the production schedule + desired ending inventory of raw materials beginning inventory of raw materials.

The production department should generally be responsible for materials price variances that resulted from

rush orders arising from poor scheduling.

Accepting a special order will improve overall net operating income if the revenue from the special order exceeds:

the incremental costs associated with the order.

The usual starting point for a master budget is:

the sales forecast or sales budget.

A favorable labor rate variance indicates that

the standard rate exceeds the actual rate.