1. Washington Regional Hospital’s cost formula for its wages and salaries is $4,500 per month plus $250
per birth. For the month of July, the company planned for activity of 300 births, but the actual level of
activity was 260 births. The actual wages and salaries for the month was $71,000. The spending variance
for wages and salaries in July would be closest to:
A. 8,500 U
B. 1,500 U
C. 8,500 F
D. 1,500 F
2. Razorback Inc. employs a standard costing system. The following data are available for January:
Actual direct labor-hours worked 9,000 hours
Standard direct labor rate $15 per hour
Labor rate variance $1,500 Unfavorable
The actual direct labor rate for January is:
A. $ 14.83 per hour
B. $ 15.17 per hour
C. $ 17.34 per hour
D. $ 20.00 per hour
3. A Fayetteville movie theater uses two activity measures, movies shown and customers. The cost
formula for the theater’s operating costs is $55,000 per month plus $400 per movie shown plus $3 per
customer. The theater expected to show 12 movies in October and expected to have 1,200 customers.
The theater actually showed 13 movies during October and actually had 980 customers. The theater
incurred actual costs of $63,812. What is the theater’s activity variance for October?
A. 672 U
B. 260 F
C. 672 F
D. 260 U
4. XYZ Corporation had the following sales for its second quarter:
April $30,000
May $45,000
June $70,000
35% of sales are collected in the month of sale, 60% in the following month, and 5% is uncollectible.
What is XYZ’s ending balance in accounts receivable for the second quarter?
A. $53,000
B. $44,250
C. $51,500
D. $42,000
5. Milo Corporation is estimating the following sales for the next few months:
April $250,000
May $375,000
June $300,000
July $400,000
August $290,000
Sales are collected 40% in the month of the sale, 35% in the month following the sale, and the
remaining 25% in the second month following the sale. Based on this information, what are the
cash receipts that Milo Corporation would expect to collect during the month of July?
A. $400,000
B. $358,750
C. $265,000
D. $358,333
6. Pearson Company manufactures sweaters. The standard for one sweater calls for 5 yards of
yarn at $25 per yard. In the past quarter, 100 sweaters were produced. The materials price
variance was $500 favorable. The materials quantity variance was $625 favorable. What was the
actual quantity of materials used in production in the last quarter?
A. 480
