Managerial Accounting FINAL EXAM
Epley Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 12.0 pounds $11.5 per pound Direct labor 0.8 hours $36.00 per hour Variable overhead 0.8 hours $17.00 per hour In July the company produced 3,470 units using 13,880 pounds of the direct material and 2,896 direct labor-hours. During the month, the company purchased 14,640 pounds of the direct material at a cost of $35,100. The actual direct labor cost was $103,840 and the actual variable overhead cost was $47,220. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for July is:
(103,840)-(2,896*36) 103,840-104,256 416 F
Gilder Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 3.6 grams $6.00 per gram $21.60 Direct labor 0.8 hours $11.00 per hour $8.80 Variable overhead 0.8 hours $6.00 per hour $4.80 The company reported the following results concerning this product in June. Originally budgeted output 8,100 units Actual output 8,000 units Raw materials used in production 28,300 grams Purchases of raw materials 31,000 grams Actual direct labor-hours 6,000 hours Actual cost of raw materials purchases $189,100 Actual direct labor cost $71,400 Actual variable overhead cost $34,200 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor efficiency variance for June is:
(Actual hours - Standard hours) x Standard rate = Labor efficiency variance .8*8000=6400 (6000-6400) *11 -400*11 4400 F Explanation: SH = 8,000 units × 0.8 hours per unit = 6,400 hours Labor efficiency variance = (AH − SH) SR = (6,000 hours − 6,400 hours) $11 per hour = (−400 hours) $11 per hour = $4,400 F
Midgley Corporation makes a product whose direct labor standards are 0.8 hours per unit and $31 per hour. In April the company produced 7,500 units using 5,500 direct labor-hours. The actual direct labor cost was $115,500. The labor efficiency variance for April is:
.8*7,500=6,000 5,500-6000=-500 -500*31 15,500 F
Consider the following production and cost data for two products, L and C: Product L Product C Contribution margin per unit $30 $24 Machine set-ups needed per unit 3 set-ups 2 set-ups The company can only perform 10,100 machine set-ups each period due to limited skilled labor and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period?
10,100/2=5050 24*5050=121,200
The following information relates to last year's operations at the Paper Division of Germane Corporation: Minimum required rate of return 7% Return on investment (ROI) 10.4% Sales $970,000 Turnover (on operating assets) 4 times What was the Paper Division's net operating income last year?
10.4/4=2.6 2.6*970,000 25,220 Explanation: ROI = Margin × Turnover 10.4% = Margin × 4 Margin = 10.4% ÷ 4 = 2.6% Margin = Net operating income ÷ Sales 2.6% = Net operating income ÷ $970,000 Net operating income = 2.6% × $970,000 = $25,220
Sparks Corporation has a cash balance of $15,300 on April 1. The company must maintain a minimum cash balance of $12,500. During April, expected cash receipts are $61,000. Cash disbursements during the month are expected to total $71,500. Ignoring interest payments, during April the company will need to borrow:
15,300+61,000-71,500=4,800 12,500-4,800=7,700 Explanation: Beginning cash balance $15,300 Add cash receipts 61,000 Total cash available 76,300 Less cash disbursements 71,500 Excess (deficiency) of cash available over disbursements $4,800 The company will need to borrow $7,700 to maintain its minimum cash balance of $12,500.
The following labor standards have been established for a particular product: Standard labor-hours per unit of output 8.2 hours Standard labor rate $15.60 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 10,300 hours Actual total labor cost $159,135 Actual output 1,300 units What is the labor rate variance for the month?
159,135-(10,300*15.60) =1,545 F Explanation: AH × AR = $159,135 Labor rate variance = (AH × AR) − (AH × SR) = ($159,135) − (10,300 hours × $15.60 per hour) = $159,135 − $160,680 = $1,545 F
Arakaki Inc. is working on its cash budget for January. The budgeted beginning cash balance is $18,000. Budgeted cash receipts total $175,000 and budgeted cash disbursements total $174,000. The desired ending cash balance is $49,000. The excess (deficiency) of cash available over disbursements for January will be:
18,000+175,000=193,000 193,000-174,000=19,000
Mccubbin Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below: Hours Move time 5.4 Wait time 27.6 Queue time 3.8 Process time 0.5 Inspection time 0.3 The delivery cycle time was: (Round your intermediate calculation and final answer to 1 decimal place.)
27.6+(.5+.3+5.4+3.8) 37.6 Explanation: Throughput time = Process time + Inspection time + Move time + Queue time = 0.5 hours + 0.3 hours + 5.4 hours + 3.8 hours = 10.0 hours Delivery cycle time = Wait time + Throughput time = 27.6 hours + 10.0 hours = 37.6 hours
(Ignore income taxes in this problem.) Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $31,000 and will have a 6-year useful life and a $4,300 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $32,300 per year. The cost of these prescriptions to the pharmacy will be about $25,600 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to:
32,300-25,600=6,700 31,000/6,700=4.6
Harris Corporation produces a single product. Last year, Harris manufactured 32,900 units and sold 27,500 units. Production costs for the year were as follows: Fixed manufacturing overhead $592,200 Variable manufacturing overhead $289,520 Direct labor $171,080 Direct materials $253,330 Sales were $1,168,750, for the year, variable selling and administrative expenses were $148,500, and fixed selling and administrative expenses were $227,010. There was no beginning inventory. Assume that direct labor is a variable cost. Under absorption costing, the ending inventory for the year would be valued at: (Do not round intermediate calculations.)
32,900-27,500=5,400 Direct materials (253,330/32,900) 7.70 Direct labor (171,080/32,900) 5.20 Variable manufacturing overhead (289,520/32,900) 8.80 Fixed manufacturing overhead cost (592,200/32,900) 18 absorption costing unit product cost (a) 39.7 units in ending inventory (b) 5,400 value of ending inventory under absorption costing (a)*(b) 214,380
Oddo Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 3.0 ounces $11.50 per ounce $34.50 Direct labor 0.8 hours $17.50 per hour $14.00 Variable overhead 0.8 hours $10.00 per hour $8.00 The company reported the following results concerning this product in December. Originally budgeted output 10,800 units Actual output 10,600 units Raw materials used in production 31,320 ounces Actual direct labor-hours 8,680 hours Purchases of raw materials 32,920 ounces Actual price of raw materials 11.25 per ounce Actual direct labor rate 18.00 per hour Actual variable overhead rate 9.50 per hour The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for December is:
32,920*(11.25-11.50) 32,920*(-.25) 8,230 F Explanation: Materials price variance = AQ × (AP − SP) = 32,920 ounces × ($11.25 per ounce − $11.50 per ounce) = 32,920 ounces × (−$0.25 per ounce) = $8,230 F
Mercer Corporation is considering replacing a technologically obsolete machine with a new state-of-the-art numerically controlled machine. The new machine would cost $320,000 and would have a sixteen-year useful life. Unfortunately, the new machine would have no salvage value. The new machine would cost $54,000 per year to operate and maintain, but would save $95,000 per year in labor and other costs. The old machine can be sold now for scrap for $32,000. The simple rate of return on the new machine is closest to: (Ignore income taxes in this problem.)
320,000/16=20,000 20,000+54,000=74,000 95,000-74,000=21,000 21,000/(320,000-32,000) 21,000/288,000=.0729
The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below: Sales $936,000 Variable expenses $412,000 Fixed manufacturing expenses $350,000 Fixed selling and administrative expenses $257,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $214,000 of the fixed manufacturing expenses and $125,000 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued. What would be the effect on the company's overall net operating income if product V41B were dropped?
350,000-214,000=136,000 257,000-125,000=132,000 350,000+257,000=607,000 214,000+125,000=339,000 136,000+132,000=268,000 257,000+125,000+132,000=524,000 524,000-607,000=-83,000 524,000-339,000=185,000 Keep the product Drop the product Difference Sales $936,000 $0 $(936,000) Variable expenses 412,000 0 412,000 Contribution margin 524,000 0 (524,000) Less fixed expenses: Fixed manufacturing expenses 350,000 136,000 214,000 Fixed selling and administrative expenses 257,000 132,000 125,000 Total fixed expenses 607,000 268,000 339,000 Net operating income (loss) $ (83,000) $(268,000) $(185,000) Decrease by 185,000
The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below: Sales $928,000 Variable expenses $407,000 Fixed manufacturing expenses $342,000 Fixed selling and administrative expenses $249,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $209,000 of the fixed manufacturing expenses and $120,000 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued. According to the company's accounting system, what is the net operating income earned by product V41B? Include all costs in this calculation—whether relevant or not.
407,000+342,000+249,000=998,000 928,000-998,000=-70,000
Chee Corporation has gathered the following data on a proposed investment project: (Ignore income taxes in this problem.) Investment required in equipment $460,000 Annual cash inflows $77,000 Salvage value $0 Life of the investment 16 years Required rate of return 12% The company uses straight-line depreciation. Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period for the investment is closest to:
460,000/77,000=5.9 6 years
At a sales volume of 41,000 units, Carne Company's sales commissions (a cost that is variable with respect to sales volume) total $561,700. To the nearest whole cent, what should be the average sales commission per unit at a sales volume of 44,600 units? (Assume that this sales volume is within the relevant range.)
561,700/41,000=13.7
Last year a company had sales of $320,000, a turnover of 2.9, and a return on investment of 63.8%. The company's net operating income for the year was:
63.8/2.9 =22 320,000*.22 =70,400 Explanation: ROI = Margin × Turnover 63.8% = Margin × 2.9 Margin = 63.8% ÷ 2.9 = 22% Margin = Net operating income ÷ Sales 22% = Net operating income ÷ $320,000 Net operating income = 22% × $320,000 = $70,400
Valley Manufacturing Corporation's beginning work in process inventory consisted of 19,000 units, 100% complete with respect to materials cost and 40% complete with respect to conversion costs. The total cost in the beginning inventory was $48,000. During the month, 68,000 units were transferred out. The equivalent unit cost was computed to be $2.8 for materials and $3.9 for conversion costs under the weighted-average method. Given this information, the total cost of the units completed and transferred out was:
68,000*2.8=190400 68,000*3.9=265200 190400+265200 =455600
The West Division of Frede Corporation had average operating assets of $715,000 and net operating income of $139,000 in December. The minimum required rate of return for performance evaluation purposes is 21%. What was the West Division's minimum required return in December?
715,000*.21 150,150 Explanation: Minimum required return = Average operating assets × Minimum required rate of return = $715,000 × 21% = $150,150
At an activity level of 9,200 machine-hours in a month, Curt Corporation's total variable production engineering cost is $825,240 and its total fixed production engineering cost is $249,100. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 9,400 machine-hours in a month? Assume that this level of activity is within the relevant range. (Do not round intermediate calculations.)
825,240/9200=89.7 249100/9400=26.5 89.7+26.5 =116.20 Explanation: Variable cost per machine-hour = $825,240 ÷ 9,200 machine-hours = $89.70 per machine-hour Fixed cost per machine-hour at 9,400 machine-hours = $249,100 ÷ 9,400 machine-hours = $26.50 per machine-hour Total cost = Variable cost + Fixed cost = $89.70 per machine-hour + $26.50 per machine-hour = $116.20 per machine-hour
The management of Kabanuck Corporation is considering dropping product V41B. Data from the company's accounting system appear below: Sales $922,000 Variable expenses $401,000 Fixed manufacturing expenses $336,000 Fixed selling and administrative expenses $243,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $203,000 of the fixed manufacturing expenses and $114,000 of the fixed selling and administrative expenses are avoidable if product V41B is discontinued. According to the company's accounting system, what is the net operating income earned by product V41B? Include all costs in this calculation—whether relevant or not.
922,000-401,000-336,000-243,000=-58,000
Baker Corporation applies manufacturing overhead on the basis of direct labor-hours. At the beginning of the most recent year, the company based its predetermined overhead rate on total estimated overhead of $95,790 and 3,100 estimated direct labor-hours. Actual manufacturing overhead for the year amounted to $97,590 and actual direct labor-hours were 3,000.
95,790/3100=30.9 3000*30.9=92,700 97,590-92,700=4,890
The management of Fannin Corporation is considering dropping product H58S. Data from the company's accounting system appear below: Sales $950,000 Variable expenses $391,000 Fixed manufacturing expenses $373,000 Fixed selling and administrative expenses $253,000 In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $239,000 of the fixed manufacturing expenses and $200,000 of the fixed selling and administrative expenses are avoidable if product H58S is discontinued. What would be the effect on the company's overall net operating income if product H58S were dropped?
950,000-391,000=559,000 239,000+200,000=439,000 559,000-439,000=120,000 The segment margin of $120,000 would be lost if product H58S were dropped and net operating income would decrease by $120,000. Another way of saying this is that the company is actually currently making $120,000 on this product. Overall net operating income would decrease by $120,000
Fahringer Corporation makes three products that use compound W, the current constrained resource. Data concerning those products appear below: BJ XS QR Selling price per unit $106.00 $500.09 $558.14 Variable cost per unit $ 82.00 $429.67 $419.97 Centiliters of compound W 2.50 9.80 10.00 Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. (Round your intermediate calculations to 2 decimal places.)
BJ XS QR Selling price per unit$106.00 $500.00 $558.14 Variable cost per unit 82.00 429.67 419.97 Contribution margin per unit (a)$24.00 $70.33 $138.17 Amount of the constrained resource required to produce one unit (b) 2.50 9.80 10.00 Contribution margin per unit of the constrained resource (a) ÷ (b) $9.6 $8.15 $13.82 Ranking 2 3 1
Paradise Corporation budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for next year. Beginning Inventory Ending Inventory Raw material* 47,000 57,000 Finished goods 87,000 57,000 *Three pounds of raw material are needed to produce each unit of finished product. If Paradise Corporation plans to sell 515,000 units during next year, the number of units it would have to manufacture during the year would be:
Beginning inventory + units produced = ending inventory + units sold 87,000+units produced=57,000+515,000 572,000-87,000=485,000
Khanam Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $135 Units in beginning inventory 0 Units produced 6,750 Units sold 6,450 Units in ending inventory 300 Variable costs per unit: Direct materials $21 Direct labor $51 Variable manufacturing overhead $15 Variable selling and administrative $15 Fixed costs: Fixed manufacturing overhead $182,250 Fixed selling and administrative $26,700 The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. What is the unit product cost for the month under absorption costing?
Direct materials $21 Direct labor 51 Variable manufacturing overhead 15 Fixed manufacturing overhead cost ($182,250 ÷ 6,750 units produced) 27 Absorption costing unit product cost $114
Harris Corporation produces a single product. Last year, Harris manufactured 26,160 units and sold 20,900 units. Production costs for the year were as follows: Fixed manufacturing overhead $470,880 Variable manufacturing overhead $224,976 Direct labor $112,488 Direct materials $188,352 Sales were $971,850, for the year, variable selling and administrative expenses were $108,680, and fixed selling and administrative expenses were $190,968. There was no beginning inventory. Assume that direct labor is a variable cost. The contribution margin per unit would be: (Do not round intermediate calculations.)
Direct materials ($188,352 ÷ 26,160 units produced)$ 7.20 Direct labor ($112,488 ÷ 26,160 units produced) $4.30 Variable manufacturing overhead ($224,976 ÷ 26,160 units produced) $8.60 Variable selling expenses ($108,680 ÷ 20,900 units sold) $5.20 Total variable expenses$ 25.30 Selling price per unit = $971,850 ÷ 20,900 units = $46.50 per unit Unit CM = Selling price per unit - Variable expenses per unit= $46.50 per unit - $25.30 per unit = $21.20 per unit
(Ignore income taxes in this problem.) Neighbors Corporation is considering a project that would require an investment of $322,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows: Sales $284,000 Variable expenses 18,000 Contribution margin 266,000 Fixed expenses: Salaries 29,000 Rents 42,000 Depreciation 37,000 Total fixed expenses 108,000 Net operating income $158,000 The scrap value of the project's assets at the end of the project would be $19,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:
Explanation: Net operating income $158,000 Add: Noncash deduction for depreciation 37,000 Annual net cash inflow $195,000 Payback period = Investment required ÷ Annual net cash inflow = $322,000 ÷ $195,000 per year = 1.7 years
(Ignore income taxes in this problem.) Dube Corporation is considering the following three investment projects: Project D Project E Project F Investment required $12,600 $57,000 $102,000 Present value of cash inflows $15,330 $83,610 $120,260 The profitability index of investment project E is closest to:
Explanation: Project E Investment required (a) $(57,000) Present value of cash inflows 83,610 Net present value (b) $26,610 Project profitability index (b) ÷ (a) 0.47
Villena Corporation is considering a project that would require an investment of $70,000. No other cash outflows would be involved. The present value of the cash inflows would be $93,100. The profitability index of the project is closest to: (Ignore income taxes in this problem.)
Investment required (a) $(70,000) Present value of cash inflows 93,100 Net present value (b) $23,100 Project profitability index (b) ÷ (a) 0.33
Gilder Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 9.70 grams $7.00 per gram $67.90 Direct labor 0.2 hours $14.00 per hour $2.80 Variable overhead 0.2 hours $7.00 per hour $1.40 The company reported the following results concerning this product in June. Originally budgeted output 8,400 units Actual output 8,500 units Raw materials used in production 41,300 grams Purchases of raw materials 48,300 grams Actual direct labor-hours 700 hours Actual cost of raw materials purchases $263,340 Actual direct labor cost $8,328 Actual variable overhead cost $3,300 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for June is:
Labor rate variance = AH(AR - SR) = 8,328 ($700 * $14.00 per hour) = 8,328 -9800 = $1472 F Explanation: Labor rate variance = (AH × AR) − (AH × SR) = ($8,328) − (700 hours × $14.00 per hour) = $8,328 − $9,800 = $1,472 F
Nantua Corporation has two divisions, Southern and Northern. The following information was taken from last year's income statement segmented by division: Total Company Southern Northern Sales $5,200,000 $3,220,000 $1,980,000 Contribution margin $2,250,000 $1,410,000 $840,000 Divisional segment margin $1,210,000 $940,000 $270,000 Net operating income last year for Nantua Corporation was $520,000. In last year's income statement segmented by division, what were Nantua's total common fixed expenses?
Net operating income = Total segment margin - Common fixed expenses 520,000=1,210,000 - common fixed expenses 690,000= common fixed expenses
Bolding Inc.'s contribution margin ratio is 64% and its fixed monthly expenses are $44,500. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $131,000?
Profit = CM ratio*Sales - Fixed expenses (.64*131,000)-44,500=39,340
Aguilera Industries is a division of a major corporation. Data concerning the most recent year appears below: Sales $18,120,000 Net operating income $1,177,800 Average operating assets $4,450,000 The division's return on investment (ROI) is closest to: (Round your answer to 2 decimal places.)
ROI=net operating income/average operating assets 1,177,800/4,450,000 26.47%
Chabot Company had the following results last year: net operating income, $10,080; turnover, 9; and ROI 24%. Chabot Company's average operating assets were:
ROI=net operating income/average operating assets 24%=10,080/average operating assets average operating assets=10,080/24%=42,000
Bolding Inc.'s contribution margin ratio is 61% and its fixed monthly expenses are $51,500. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $145,000?
Sales...........................................................$145000 Variable expenses ($145,000 × 39%)........56,550 Contribution margin ($145,000 × 61%)....88,450 Fixed expenses...........................................51,500 Net operating income.................................$36,950 Explanation: Profit = (CM ratio × Sales) − Fixed expenses = (0.61 × $145,000) − $51,500 = $88,450 − $51,500 = $36,950
Which of the following is NOT an objective of the budgeting process?
To ensure that the company continues to grow.
LFM Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.1 hours of direct labor at the rate of $17.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 40,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 620 and 120 units, respectively. Budgeted direct labor costs for June would be:
Units to be produced = Sale units + Ending inventory - Beginning inventory = 40000 + 120 - 620 = 39,500 units Direct labor hours required = 39,500 units * 2.1 hours per unit = 82,950 hours Direct labor cost = 82,950 hours * $17 per hour = $1,410,150 Explanation: Direct labor budget June Budgeted unit sales 40,000 Add desired ending finished goods inventory 120 Total needs 40,120 Less beginning finished goods inventory 620 Required production in units 39,500 Direct labor-hours per unit 2.1 Total direct labor-hours needed 82,950 Direct labor cost per hour $17 Budgeted direct labor costs for june $1,410,150
(Ignore income taxes in this problem.) Baldock Inc. is considering the acquisition of a new machine that costs $438,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are: Incremental Net Operating Income Incremental Net Cash Flows Year 1 $79,000 $154,000 Year 2 $85,000 $164,000 Year 3 $96,000 $175,000 Year 4 $59,000 $161,000 Year 5 $101,000 $163,000 Assume cash flows occur uniformly throughout a year except for the initial investment. The payback period of this investment is closest to:
Year 1 438,000 154,000 284,000 Year 2 164,000 120,000 Year 3 175,000 Year 4 161,000 120,000/175,000= 0.7 Payback =2.7 years
During February, Irving Corporation incurred $85,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $82,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:
debit to Manufacturing Overhead of $85,000 Manufacturing overhead$ 85,000 Accounts payable, cash, or other Asset accounts$ 85,000
Pardoe, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product: Standard Quantity Standard Price or Rate Standard Cost Direct materials 2.0 pounds $6.25 per pound $12.50 Direct labor 0.5 hours $19 per hour $9.5 Variable manufacturing overhead 0.5 hours $4.50 per hour $2.25 During March, the following activity was recorded by the company: • The company produced 5,600 units during the month. • A total of 14,700 pounds of material were purchased at a cost of $41,160. • There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,940 pounds of material remained in the warehouse. • During March, 3,000 direct labor-hours were worked at a rate of $19.50 per hour. • Variable manufacturing overhead costs during March totaled $6,950. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for March is:
materials price variance=(AQ*AP)-(AQ*SP) (41,160)-(14,700*6.25) 41,160-91,875 50,715 F
Guo Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 650 units. The costs and percentage completion of these units in beginning inventory were: Cost Percent Complete Materials costs $ 8,900 55 % Conversion costs $ 3,700 15 % A total of 11,300 units were started and 10,700 units were transferred to the second processing department during the month. The following costs were incurred in the first processing department during the month: Materials costs $241,000 Conversion costs $378,000 The ending inventory was 80% complete with respect to materials and 70% complete with respect to conversion costs. Note: Your answers may differ from those offered below due to rounding error. In all cases, select the answer that is the closest to the answer you computed. To reduce rounding error, carry out all computations to three decimal places. The cost per equivalent unit for materials for the month in the first processing department is closest to:
units transferred to the next department 10,700 ending work in process: materials: (11,300-10,700+650=1,250 ) *80% 1000 equivalent units of production: 11,700 cost of beginning work in process inventory: 8,900 costs added during the period 241,000 total cost (a) 249,900 equivalent units of production (b) 11,700 cost per equivalent units (a) / (b) 21.36