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1) Galla Corporation makes a product with the following standard costs:
The company budgeted for production of 2,400 units in June, but actual production was
2,500 units. The company used 19,850 pounds of direct material and 980 direct
labor-hours to produce this output. The company purchased 21,700 pounds of the direct
material at $6.70 per pound. The actual direct labor rate was $19.20 per hour and the
actual variable overhead rate was $1.80 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 labor rate variance for June is:
A.$800 U
B.$784 U
C.$800 F
D.$784 F
2) The income tax expense in year 2 is:
A.$17,500
B.$7,000
C.$28,000
D.$10,500
3) When the level of activity decreases, variable costs will:
A) increase per unit.
B) increase in total.
C) decrease in total.
D) decrease per unit.
4) Starg Corporation, a retailer, plans to sell 25,000 units of Product X during the month
of August. If the company has 9,000 units on hand at the start of the month, and plans to
have 7,000 units on hand at the end of the month, how many units of Product X must be
purchased from the supplier during the month?
A.32,000
B.23,000
C.27,000
D.25,000
5) Lasorsa Corporation manufactures a single product. Variable costing net operating
income last year was $86,000 and this year was $98,000. Last year, $4,000 in fixed
manufacturing overhead costs were released from inventory under absorption costing.
This year, $27,000 in fixed manufacturing overhead costs were deferred in inventory
under absorption costing.
What was the absorption costing net operating income this year?
A.$125,000
B.$72,000
C.$75,000
D.$121,000
6) BieryCorporation makes a product with the following standard costs:
The company produced 4,100 units in April using 5,380 liters of direct material and
2,610 direct labor-hours. During the month, the company purchased 6,000 liters of the
direct material at $5.80 per liter. The actual direct labor rate was $19.80 per hour and
the actual variable overhead rate was $2.90 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 labor efficiency variance for April is:
A.$2,850 F
B.$2,850 U
C.$2,970 F
D.$2,970 U
7) What would be the total prevention cost appearing on the quality cost report?
A.$133,000
B.$154,000
C.$131,000
D.$115,000
8) Budgeted sales in Acer Corporation over the next four months are given below:
Twenty-five percent of the company's sales are for cash and 75% are on account.
Collections for sales on account follow a stable pattern as follows: 50% of a month's
credit sales are collected in the month of sale, 30% are collected in the month following
sale, and 15% are collected in the second month following sale. The remainder are
uncollectible. Given these data, cash collections for December should be:
A.$103,875
B.$98,125
C.$136,375
D.$119,500
9) When the actual wage rate paid to direct labor workers exceeds the standard wage
rate, the journal entry would include:
A.Credit to Wages Payable; Credit to Labor Rate Variance
B.Credit to Work-In-Process; Credit to Labor Rate Variance
C.Credit to Wages Payable; Debit to Labor Rate Variance
D.Credit to Work-In-Process; Debit to Labor Rate Variance
10) Galla Corporation makes a product with the following standard costs:
The company budgeted for production of 2,400 units in June, but actual production was
2,500 units. The company used 19,850 pounds of direct material and 980 direct
labor-hours to produce this output. The company purchased 21,700 pounds of the direct
material at $6.70 per pound. The actual direct labor rate was $19.20 per hour and the
actual variable overhead rate was $1.80 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 June is:
A.$6,150 F
B.$6,150 U
C.$6,510 F
D.$6,510 U
11) The net cash provided by (used in) operating activities for the year was:
A.$51
B.$69
C.$9
D.$86
12) Tish Corporation produces a part used in the manufacture of one of its products.
The unit product cost is $26, computed as follows:
An outside supplier has offered to provide the annual requirement of 5,000 of the parts
for only $21 each. The company estimates that 75% of the fixed manufacturing
overhead cost above could be eliminated if the parts are purchased from the outside
supplier. Assume that direct labor is an avoidable cost in this decision. Based on these
data, the per-unit dollar advantage or disadvantage of purchasing from the outside
supplier would be:
A) $1 disadvantage
B) $5 advantage
C) $3 advantage
D) $4 disadvantage
13) Taccone Corporation makes a product that has the following direct labor standards:
In February the company produced 4,100 units using 1,120 direct labor-hours. The
actual direct labor rate was $20.40 per hour.
The labor rate variance for February is:
A.$448 U
B.$448 F
C.$492 U
D.$492 F
14) Coviello Corporation would like to determine the relative profitability of the
company's products for purposes of making volume trade-off decisions. For example,
the selling price of product C98I is $368.00, its unit variable cost is $257.60, and its
unit contribution margin is $110.40. One unit of the product requires 16 minutes of the
constrained resource. Monthly sales are 4,400 units. What is the profitability index for
product C98I?
A.0.30
B.$23.00 per minute
C.$485,760
D.$6.90 per minute
