ACCT 2101 adaptive practice
Q 9.10: Toledo Manufacturing has the following variable overhead costs: Indirect materials: $2.18/hourIndirect labor: $3.26/hourUtilities: $0.90/hourMaintenance: $0.33/hourDirect labor hours: 14,500 If Toledo decides that they need to increase their indirect materials to $2.25 per hour, how much will this increase their total variable costs?
$1,015
Q 11.20: Last quarter, RP Enterprises earned $220,000 in sales revenue and had $90,000 cost of goods sold (at standard). RP also experienced these variances: Materials price: $2,400 F Materials quantity: $1,400 U Labor price: $2,000 U Labor quantity: $1,000 F Overhead: $1,500 F What was RP's actual gross profit?
$131,500
Q 9.15: The Brenneman Company's direct materials budget shows total cost of direct materials purchases for January $125,000, February $150,000 and March $175,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for March are
$165,000.
Q 10.7: Windell Company uses flexible budgets. At normal capacity of 8,000 units, budgeted manufacturing overhead is: $64,000 variable and $180,000 fixed. If Windell had actual overhead costs of $250,000 for 9,000 units produced, what is the difference between actual and budgeted costs?
$2,000 favorable
Q 11.4: JT Engineering's normal capacity is 20,000 direct labor hours. JT estimated its variable manufacturing overhead costs to be $26,400 and its fixed manufacturing overhead costs to be $14,900 when the company runs at normal capacity. If JT incurs $28,000 of manufacturing overhead costs, what is its standard predetermined manufacturing overhead rate per direct labor hour?
$2.07
Q 11.8: JT Engineering has determined that it should cost $14,000 in direct materials, $12,600 in direct labor, and $6,200 in total overhead to produce 1,000 widgets. During the most recent period, JT actually spent $13,860 in direct materials, $12,420 in direct labor, and $6,500 in total overhead to produce 1,000 widgets. What is JT's total variance? Is it favorable or unfavorable?
$20 favorable.
Q 9.9: Rose Company is preparing its direct labor budget for May. Projections for the month are that 8,350 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $9, what is the total budgeted direct labor cost for May?
$225,450
Q 9.13: On January 1, Scarlett Company has a beginning cash balance of $21,000. During the year, the company expects cash disbursements of $170,000 and cash receipts of $145,000. If Scarlett requires an ending cash balance of $20,000, the Scarlett Company must borrow:
$24,000
Q 10.9: Fisher Steel produces steel plates for manufacturing and construction. They generally use a static budget with the following costs based on 50,000 units per month: indirect materials, $105,000; indirect labor, $98,000; utilities, $14,000; supervision, $5,000; depreciation, $22,000. If Fisher wanted to create a flexible budget for 60,000 units, what value would they record for fixed costs?
$27,000
Q 9.19: Katie's Cleaning Service has cleaning contracts for 15 apartments, 45 family homes, and 25 office buildings. She estimates that an apartment takes 4 hours to clean, a home takes 6 hours to clean, and an office building takes 10 hours to clean. Katie pays her cleaning staff $12.50/hour. If each location is cleaned once per week, how much does Katie need to budget for direct labor each month? Assume there are four weeks per month.
$29,000
Q 11.9: JT Engineering expects to pay $21 per pound of copper and use 300 pounds of copper per 1,000 widgets. Due to the current high demand for copper, JT is currently paying $32 per pound of copper. What is JT's materials price variance for a purchase of 300 pounds of copper?
$3,300 unfavorable.
Q 11.7: Haden Company has determined that the standard material cost for the silk used in making a dress is $27.00 based on three square feet of silk at a cost of $9.00 per square foot. The production of 1,000 dresses resulted in the use of 3,400 square feet of silk at a cost of $9.20 per square foot. What is the direct materials quantity variance?
$3,600 unfavorable.
Q 10.6: In the Proctor Company, indirect labor is budgeted for $24,000 and factory supervision is budgeted for $8,000 at normal capacity of 80,000 direct labor hours. If 90,000 direct labor hours are worked, flexible budget total for these costs is
$35,000.
Q 11.13: Pretzel Company used 20,000 direct labor hours when standard hours were 21,000. The actual pay rate was $6.30 when the standard rate was $6.50. The labor quantity variance is
$6,500 favorable.
Q 10.8: Jensen Automotive produces alternators for American-made cars. They generally use a static budget with the following costs based on 8,000 units per month: indirect materials, $22,000; indirect labor, $25,000; utilities, $12,000; supervision, $4,000; depreciation, $18,000. If Jensen wanted to create a flexible budget for 9,000 units, what value would they record for variable costs?
$66,375
Q 11.15: Information on Smith's direct labor costs for the month of August are as follows: Actual rate: $7.50 Standard hours: 11,000 actual hours: 10,000 direct labor price variance - unfavorable: 5,000 What was the standard rate for August?
$7.00
Q 9.7: In the Progressa Company required production for June is 44,000 units. To make one unit of finished product, three pounds of direct material Z are required. Actual beginning and desired ending inventories of direct material Z are 100,000 and 110,000 pounds, respectively. How many pounds of direct material Z must be purchased?
142,000
Q 10.19: What is the return on investment if controllable margin is $300,000 and the average investment center operating assets are $1,000,000?
30%
Q 9.11: Dobbins Resources pays sales commissions of $2 per unit and shipping costs of $0.75 per unit. If Dobbins expects to sell 12,000 units in the third quarter, what will their total variable expenses be?
33,000
Q 10.13: Controllable costs for responsibility accounting purposes are those costs that are directly influenced by which of the following?
A given manager within a given period of time
Q 10.17: Which of the following will cause the ROI to increase?
An increase in sales.
Q 11.10: JT Engineering uses copper in its widgets. Demand for copper in the widget industry is greater than the available supply. As a result, JT is unable to secure its typical discount with suppliers. Assuming that JT orders the same quantity as usual and that no changes are made to any of JT's materials standards, what is the most likely end-of-quarter result?
An unfavorable materials price variance.
Q 10.15: Of the following, which is not a direct fixed cost of a profit center?
General office administrative costs.
Q 9.18: Which of the following statements is correct?
In the budget process for not-for-profit organizations, the emphasis is on cash flow rather than on revenue and expenses.
Q 10.20: A manager at which of the following centers will have the highest number of assets to manage in order to have a positive performance evaluation?
Investment center
Q 9.4: Which of the following is a characteristic of long-range planning?
It is used to review progress rather than as a basis for control.
Q 10.1: Of the following, which would not be considered an aspect of budgetary control?
It provides a guarantee for favorable results.
Q 11.2: Garrett and Liam manage two different divisions of the same company. Garrett uses ideal standards to gauge his employees' performance, while Liam uses normal standards to gauge his employees' performance. Whose employees are likely to perform better? Why?
Liam's employees, because normal standards are better for morale, as they are rigorous but attainable.
Q 10.11: Identifying an exception under management by exception uses these criteria:
Materiality and controllability.
Q 11.16: Which of the following departments is generally responsible for an UNFAVORABLE materials price variance?
Purchasing.
Q 11.19: The following explanations appeared on last week's variance report for JT Engineering's purchasing department. Which of these explanations would relate to an unfavorable materials price variance?
Rush order.
Q 10.3: Of the following, which is not part of a formalized reporting system?
State the corrective action that should be taken.
Q 10.2: All but which one of the following is involved in budgetary control?
Take disciplinary action.
Q 10.18: Of the following, which is incorrect about average operating assets?
The assets are valued at fair market values.
Q 11.5: Which of the following most accurately describes the relationship between a direct materials price standard and a direct materials quantity standard?
The standards are multiplicative; the price standard is multiplied by the materials standard to determine the standard cost per unit.
Q 11.17: Itty Bitty Airline has implemented a balanced scorecard approach to ensure that all of its stakeholders are satisfied with its performance. Based on the company's vision and mission, it has identified the following initiatives: ● To be responsive to customer complaints ● To achieve consistent revenue growth ● To increase employee cross-training ● To increase customer loyalty Which of these initiatives is most closely aligned to the learning and growth perspective of the balanced scorecard?
To increase employee cross-training.
Q 11.11: Which of the following is the difference between the actual labor rate multiplied by the actual labor hours worked and the standard labor rate multiplied by the standard labor hours?
Total labor variance.
Q 11.14: An UNFAVORABLE labor quantity variance means that
actual hours exceeded standard hours.
Q 9.20: City Mission is a not-for-profit organization that provides hot meals, living quarters, and showers for homeless people. Based on their yearly budget, they expect to spend $450,000 on food expenses, $350,000 on housing expenses, $280,000 on staff salaries, $90,000 on utilities, and $118,000 on other expenses. How much will City Mission need to raise in donations?
at least $1,288,000
Q 9.3: Coordinating the preparation of the budget is the responsibility assigned to the
budget committee.
Q 10.16: When using the return on investment (ROI) formula,
controllable margin is divided by average investment center operating assets.
Q 10.12: Responsibility accounting cannot be used effectively
for costs allocated to the responsibility level.
Q 11.1: A standard that represents the optimum level of performance under perfect operating conditions is called a(n)
ideal standard.
Q 10.14: A responsibility reporting system
involves the preparation of a report for each level of responsibility shown in the company's organization chart.
Q 9.2: In order to assure better management acceptance, the flow of input data for budgeting should begin with the
lower levels of management.
Q 9.17: A purchases budget is used instead of a production budget by
merchandising companies.
Q 11.12: The labor price variance is the difference between the
standard and actual rate multiplied by actual hours.
Q 10.4: When using a static budget,
the actual results are always compared with budgeted data at the original budgeted activity level.
Q 11.18: When reporting variances,
the reports should facilitate management by exception.
Q 9.12: When they made their master budget, 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
Q 11.6: McCaffee Company has established the following standards: direct materials quantity standard of 1 pound per widget and direct materials price standard of $2 per pound.. In producing 50,000 widgets, 45,000 pounds of materials were used at a cost of $2.10 per pound. What is the materials price variance?
$4,500 unfavorable.
Q 9.8: 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
Q 11.3: JT Engineering plans to spend $1.30 per pound purchasing raw materials, $0.30 per pound of freight charges from the raw materials supplier, and $0.13 per pound receiving the materials. JT expects to use 2.75 pounds of raw materials making widgets and allows 0.25 pounds of waste per widget. What is JT's standard direct materials cost per widget?
$5.19
Q 9.14: The Eccleston Company has the following budgeted sales: January $40,000, February $60,000, and March $50,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% of the amount is collected in the month of sale, and 50% in the next month. The total expected cash receipts during March are
$53,000
Q 9.6: The Crawford Company has 3,000 units in beginning finished goods. The sales budget shows expected sales to be 12,000 units. If the production budget shows that 14,000 units are required for production, what was the desired ending finished goods?
5,000
Q 9.5: The Burlington Company has 12,000 units in beginning finished goods. If sales are expected to be 60,000 units for the year and Burlington desires ending finished goods of 15,000 units, how many units must Burlington produce?
63,000
Q 10.10: When they produce 20,000 units per month, Sanders Incorporated has variable costs of $392,000 and fixed costs of $242,000. If Sanders increases their production to 25,000 units, by how much will they have to increase their budget?
98,000
Q 9.1: Which of the following represents the flow of budget data under participative budgeting?
Department Manager to Plant Manager to Vice President of Production
Q 9.16: Which line items of the budgeted balance sheet are calculated based on operating budgets?
Finished goods inventory, raw materials inventory, and retained earnings.
