ACCT 2101 Exam 2 (APs)

LDM Co. is preparing its direct labor budget. For the current month, the company has budgeted to sell 40,400 units and will produce 90% of those units during the month. LDM's total budgeted amount for direct labor is $1,924,171.20 and each unit requires 4.2 hours. What is the budgeted amount per direct labor hour? $10.21 $52.92 $12.60 $11.34

$12.60 The formula for budgeted amount per direct labor hour is total budgeted direct labor divided by total labor hours of production. Units produced is 90% of sales and it takes 4.2 hours per unit. $1,924,171.20 ÷ (90% x 40,400 sales x 4.2 hours) = $12.60

In early February, Heavenly Swimwear is preparing the budget for swimsuits for the summer season. Budgeted sales are 47,600 suits for May, 58,200 suits for June, and 43,500 suits for July. Each suit requires 1.3 yards of fabric. Each swimsuit sells for $22. Heavenly Swimwear requires ending Finished Goods inventory equal to 30% of the following month's budgeted sales. If the price of fabric is $2 per yard, what is Heavenly Swimwear's budgeted cost for fabric for June? $125,220 $107,580 $139,854 $162,786

$139,854 The formula to arrive at the production budget is budgeted sales + budgeted ending inventory - budgeted beginning inventory.Beginning inventory for June is ending inventory from May, which is 30% of 58,200 units. 58,200 + (43,500 x 30%) - (58,200 x 30%) = 53,790 units 53,790 units x 1.3 yards x $2 = $139,854 budgeted cost for fabric in June

Saalfeld Industries used direct materials of $234,582, direct labor of $390,417, variable overhead of $42,600, and fixed overhead of $30,429 to make 150,000 units. The total standard costs for 150,000 units is $712,500. What is the total variance? $14,472 favorable $87,501 favorable $14,472 unfavorable $87,501 unfavorable

$14,472 favorable Total actual costs = $234,582 + $390,417 + $42,600 + $30,429 = $698,028. Total variance is actual costs of $698,028 less standard costs of $712,500 = $14,472 favorable.

Charley's Confections is a bakery. The base hourly rate for bakers is $12.00. Employer payroll taxes equal 8% of the hourly rate, and fringe benefits (vacation, retirement, workers' compensation insurance, etc.) equal 25% of the hourly rate. What is the standard direct labor rate per hour for Charley's bakers? $12.41 $14.78 $12.35 $15.96

15.96 Standard direct labor rate per hour = $12 + ($12 x 0.08) + ($12 x 0.25) = $15.96 per hour.

Fukui Electronics sells 15,000 units in their slow months and 75,000 units in their busy months. If Fukui wanted to develop a flexible budget, what interval should they use between each activity index? 20,000 units 1,000 units 50,000 units 5,000 units

20,000 units Both 1,000 and 5,000 unit intervals are too small for this wide range of units sold, and a 50,000 unit interval is too large. The best option from the available options would be an interval of 20,000 units, which would give the company four activity levels in their flexible budget, although other reasonable options could be considered.

Which of the following companies is likely to have the least formal budget process? Betty's Bakery, a small-town bakery that has been open for three years Jet Ski Haven, a jet ski rental company with rental offices along the U.S. coasts Trending Fashions, a new business that is trying to get investment funding Altman Industries, an international manufacturing company

Betty's Bakery, a small-town bakery that has been open for three years

When calculating differences between projected and actual budget data in flexible budgets, which of the following costs would be the most important cost to consider? property taxes depreciation supervisor salaries indirect labor

indirect labor

The accountant for Harper Company is preparing a flexible budget. The activity index is machine hours and the relevant range is 4,000 hours to 26,000 hours. The increment of activity chosen for the flexible budget is largely a matter of judgment. should be the same as those used by others companies throughout the industry. is determined by the Cost Accounting Standards Board. should be no smaller than 100 hours and no larger than 1,000 hours.

is largely a matter of judgment.

Identifying an exception under management by exception uses these criteria: materiality and frequency. materiality and controllability. controllability and frequency. controllable only.

materiality and controllability.

Budgets are a management tool used to maximize incentives paid out to employees and managers. minimize the company's costs. plan and control the direction of a company's operations. maximize the company's stock price.

plan and control the direction of a company's operations.

When using a static budget, only budgeted variable costs are compared with actual variable costs. the actual results are always compared with budget data at the original budgeted activity level. it is important to select an activity index and a relevant range of activity. data are modified and adjusted according to changes in activity during the year

the actual results are always compared with budget data at the original budgeted activity level.

Gulf Coast Shrimp Packaging supplies frozen shrimp to grocery chains. It expects sales of 400 tons of shrimp in the next quarter and it plans to produce 380 tons during the same quarter. Each ton requires 50 direct labor hours and employees are paid $15 per hour. Manufacturing overhead is applied at 120% of direct labor costs. What is the total amount to be budgeted for manufacturing overhead for the quarter? $702,000 $376,200 $360,000 $342,000

$342,000 The budgeted manufacturing overhead for the quarter is applied at 120% of the direct labor cost. The formula for direct labor costs is units to be produced multiplied by direct labor hours per unit multiplied by direct labor cost per hour. Using this formula, Gulf Coast Shrimp Packaging can calculate the budgeted manufacturing overhead as: 380 tons x 50 hours x $15 per hour = $285,000 direct labor cost $285,000 x 120% = $342,000 budgeted manufacturing overhead

When the master budget was prepared, Vann Enterprises had direct material per unit costs of $12.43, direct labor per unit costs of $8.46, and manufacturing overhead per unit costs of $14.29. They planned to sell 16,000 units in the first quarter. However, in the first week of the first quarter, the direct material per unit costs rose to $16.12, which increased the selling price of the finished product. Therefore, Vann Enterprises only sold 15,500 units. What would the difference in cost of goods sold be between the budgeted income statement and the actual income statement? $39,605 increase $59,040 increase $39,605 decrease $59,040 decrease

$39,605 increase The original budget would have a cost of goods sold of ($12.43 + $8.46 + $14.29) × 16,000 = $562,880. The actual income statment have a cost of goods sold ($16.12 + $8.46 + $14.29) × 15,500 = $602,485. This is an increase in cost of goods sold of $39,605.

James Company determines that 13,500 pounds of direct materials are needed for production in July. There are 800 pounds of direct materials on hand at July 1 and the desired ending inventory is 700 pounds. If the cost per pound of direct materials is $3, what is the budgeted total cost of direct materials purchases? $40,200 $40,800 $39,600 $41,400

$40,200 The formula to arrive at direct materials units to be purchased is budgeted production + budgeted ending inventory - budgeted beginning inventory. 13,500 + 700 - 800 = 13,400 pounds 13,400 pounds x $3 = $ 40,200

Gradebook Publishers prints textbooks for public grade schools. The standard direct labor quantity per textbook is 0.5 direct labor hours and the standard direct labor rate is $10 per hour. Last month, 150,000 textbooks were produced and 73,500 actual direct labor hours were worked. The company's direct labor payroll for last month was $698,250. What was the total direct labor variance? $36,750 favorable $15,000 favorable $51,750 favorable $50,715 favorable

$51,750 favorable Total direct labor variance = (actual hours x actual rate) - (standard hours x standard rate). Standard hours = 150,000 textbooks x 0.5 hours per textbook = 75,000 hours. $698,250 - (75,000 x $10) = $51,750 favorable.

Fox Run Co. manufactures a product with a direct labor quantity standard of 6 hours per unit and a direct labor price standard of $25.60 per hour. During October, Fox Run's actual direct labor payroll was $314,496 and the company used 12,600 direct labor hour to produce 2,000 units of the product. What is Fox Run's total direct labor variance for October? $8,064 unfavorable $15,360 unfavorable $8,064 favorable $7,296 unfavorable

$7,296 unfavorable Total direct labor variance = (actual hours x actual rate) - (standard hours x standard rate). Standard hours = 2,000 units x 6 hours per unit = 12,000 hours.$314,496 - (12,000 x $25.60) = $7,296 unfavorable.

Century Manufacturing developed the following per-unit standards for its product: 4 pounds of direct materials at $6.40 per pound. Last month, 3,000 pounds of direct materials were purchased and used for $18,240. The direct materials price variance for last month was _______. $2,160 unfavorable $480 favorable $480 unfavorable $960 favorable

$960 favorable Materials price variance = (actual quantity x actual price) - (actual quantity x standard price). $18,240 - (3,000 x $6.40) = $960 favorable.

The static budget for production of bicycles by Wheel Professionals is based on 3,000 units produced per month. For this level of production, indirect materials are $75,000, indirect labor is $92,000, utilities are $26,000, depreciation is $42,000, and supervision is $6,000. What would the company's total budget be if they produced a flexible budget for 4,000 units? (Round your answer to the nearest whole number.) $305,333 $296,667 $321,333 $307,333

305,333 All variable costs must be adjusted to account for the additional 1,000 units. Fixed costs will remain unchanged with the additional units produced. Thus, we can create flexible budget as follows:Variable costs include indirect materials ($75,000) + indirect labor ($92,000) + utilities ($26,000) = $193,000.To increase production from 3,000 to 4,000 units, variable costs would be ($193,000 / 3,000) x 4,000 = $257,333.Fixed costs would remain the same at $42,000 (depreciation) + $6,000 (supervision) = $48,000.Therefore, the total budgeted amount would be $257,333 + $48,000 = $305,333.

Karl Kooling is the cost accountant for Triple A Candy Manufacturers. For the current year, Karl expects to incur a total of $768,420 in manufacturing overhead costs and $465,710 in direct labor costs. Triple A's variable manufacturing overhead rate has been 80% of direct labor cost, and that rate is not expected to change. The standard direct labor cost per pound of candy is $5.60. What is Triple A's standard variable manufacturing overhead cost per pound of candy? $10.08 $9.24 $4.48 $4.76

4.48 Standard variable manufacturing overhead cost per pound of candy = $5.60 x 80% = $4.48.

After receiving financial information about the riding toy division at Rainbow Toys, management is considering closing the riding toy division. The division generated revenues of $950,500, the contribution margin was $239,800, and division income was ($162,700). However management discovered that $395,200 of corporate fixed overhead has been allocated to the division and included in the computation of division income. With this additional information, should Rainbow close the riding toy division? Why or why not? Yes, its controllable margin is ($557,900). Yes, its controllable margin is ($232,500). No, its controllable margin is $232,500. No, its controllable margin is $557,900.

No, its controllable margin is $232,500. Because indirect fixed cost allocations are not controllable by management, they must be removed from the division income to arrive at the controllable margin.The controllable margin = ($162,700) + $395,200 = $232,500

Controllable costs for responsibility accounting purposes are those costs that are directly influenced by which of the following? sales volume a change in activity production volume a given manager within a given period of time

a given manager within a given period of time