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Region II, anticipated sales 125,000 units 25,000 units
The unit selling price for aluminum cans is $0.15 and for tin cans is $0.20.
Budgeted production for tin cans during the month is _____.
a. 108,000 units
b. 83,000 units
c. 112,000 units
d. 120,000 units
119. Based on the following information, calculate process yield.
Units passing inspection 12,750 units
Units entering process 15,000 units
a. 85%
b. 15%
c. 90%
d. 117%
120. Benjamin Corporation began its operations on September 1 of the current year. Budgeted sales for the first three
months of business are $250,000, $300,000, and $420,000, respectively, for September, October, and November. The
company expects to sell 20% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the
month of the sale, 25% in the month following the sale, and the remainder in the following month.
The cash collections from accounts receivable in September are _____.
a. $175,000
b. $140,000
c. $190,000
d. $168,000
121. Standard cost per unit is calculated as _____.
a. standard rate per hour multiplied by standard time
b. standard price multiplied by standard quantity
c. standard quantity divided by standard price
d. service units used divided by available service units
122. Which of the following is true of a capital expenditures budget?
a. It summarizes plans for acquiring fixed assets.
b. It indicates all the estimated cash receipts and cash payments for a period of time.
c. It records all short-term expenses for a period.
d. It lists all the transactions related to capital stock.
123. If skilled, highly paid employees are used in jobs that are normally performed by unskilled, lower-paid employees, it
will result in _____.
a. an unfavorable direct labor time variance
b. a favorable variable overhead variance
c. a favorable direct labor rate variance
d. an unfavorable direct labor rate variance
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124. Frogue Corporation uses a standard cost system. The following information was provided for the period that just
ended:
Actual price per kilogram $3.00
Actual kilograms of material used 31,000
Actual hourly labor rate $18.20
Actual hours of production 4,900 labor hours
Standard price per kilogram $2.80
Standard kilograms per completed unit 6 kilograms
Standard hourly labor rate $18.00
Standard time per completed unit 1 hr.
Actual total factory overhead $34,900
Actual fixed factory overhead $18,000
Standard fixed factory overhead rate $1.20 per labor hour
Standard variable factory overhead rate $3.80 per labor hour
Maximum plant capacity 15,000 hours
Units completed during the period 5,000
The direct labor cost variance is _____.
a. $1,310 favorable
b. $820 favorable
c. $1,310 unfavorable
d. $820 unfavorable
125. If the actual direct labor hours spent producing a commodity differ from the standard hours, the variance is termed
_____.
a. time variance
b. price variance
c. quantity variance
d. rate variance
126. Efficient Corporation uses a standard cost system. The following information was provided for the period that just
ended:
Actual price per gallon $11.75
Actual gallons of material used 5,000
Actual hourly labor rate $17.00
Actual hours of production 24,300
Standard price per gallon $12.00
Standard gallons per completed unit 1/2
Standard hourly labor rate $12.00
Standard time per completed unit 3 hrs.
Units completed during the period 9,000
The direct labor time variance is _____.
a. $31,725 favorable
b. $32,400 favorable
c. $89,100 unfavorable
d. $121,500 unfavorable
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127. Efficient Corporation uses a standard cost system. The following information was provided for the period that just
ended:
Actual price per gallon $11.75
Actual gallons of material used 5,000
Actual hourly labor rate $17.00
Actual hours of production 24,300
Standard price per gallon $12.00
Standard gallons per completed unit 1/2
Standard hourly labor rate $12.00
Standard time per completed unit 3 hrs.
Units completed during the period 9,000
The direct labor rate variance is _____.
a. $135,000 unfavorable
b. $89,100 favorable
c. $89,100 unfavorable
d. $121,500 unfavorable
128. The formula to compute direct materials price variance is _____.
a. Actual costs – (Actual quantity × Standard price)
b. Actual cost + Standard costs
c. Actual cost – Standard costs
d. (Actual quantity × Standard price) – Standard costs
129. Nyt Garments Co.’s static budget at 10,000 units of production includes $30,000 for direct material and $5,000 for
electric power. Total fixed costs are $31,000. At 12,000 units of production, a flexible budget would show _____.
a. variable costs of $40,000 and $35,000 of fixed costs
b. variable costs of $44,000 and $23,000 of fixed costs
c. variable costs of $42,000 and $31,000 of fixed costs
d. variable costs of $41,000 and $30,000 of fixed costs
130. A variant of fiscal-year budgeting whereby a 12-month projection into the future is maintained at all times is termed
_____.
a. flexible budgeting
b. master budgeting
c. zero-based budgeting
d. continuous budgeting
131. For February, sales revenue is $300,000; sales commissions are 5% of sales; the sales manager’s salary is $40,000;
advertising expenses are $13,000; shipping expenses total 1% of sales; and miscellaneous selling expenses are $1,100 plus
1/2 of 1% of sales. Total selling expenses for the month of February are _____.
a. $71,000
b. $55,000
c. $58,600
d. $73,600
132. Which of the following formulas is used to compute utilization rate?
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a. Units entering process/Units passing inspection
b. Service units used/Available service units
c. Standard quantity/Actual quantity
d. (Actual price – Standard price) × Actual quantity
133. If the price paid per unit differs from the standard price per unit for direct materials, the variance is termed _____.
a. variable variance
b. controllable variance
c. price variance
d. volume variance
134. The following data relate to direct labor costs for the current period of Executive Inc.:
Standard costs 6,000 hours at $12.00
Actual costs 7,500 hours at $11.60
What is the direct labor time variance?
a. $17,400 favorable
b. $17,400 unfavorable
c. $18,000 favorable
d. $18,000 unfavorable
135. Microgen Company’s static budget for 12,000 units of production includes $48,000 for direct materials, $36,000 for
direct labor, utilities of $6,000, and supervisor salaries of $18,000. A flexible budget for 14,000 units of production would
show _____.
a. the same cost structure in total
b. direct materials of $56,000, direct labor of $42,000, utilities of $7,000, and supervisor salaries of $18,000
c. total variable costs of $126,800
d. direct materials of $50,000, direct labor of $37,500, utilities of $6,250, and supervisor salaries of $21,000
136. Benjamin Corporation began its operations on September 1 of the current year. Budgeted sales for the first three
months of business are $250,000, $300,000, and $420,000, respectively, for September, October, and November. The
company expects to sell 20% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the
month of the sale, 25% in the month following the sale, and the remainder in the following month.
The cash collections from accounts receivable in October are _____.
a. $270,000
b. $272,500
c. $210,000
d. $218,000
137. Efficient Corporation uses a standard cost system. The following information was provided for the period that just
ended:
Actual price per gallon $11.75
Actual gallons of material used 5,000
Actual hourly labor rate $17.00
Actual hours of production 24,300
Standard price per gallon $12.00
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Standard gallons per completed unit 1/2
Standard hourly labor rate $12.00
Standard time per completed unit 3 hrs.
Units completed during the period 9,000
The total direct labor variance is _____.
a. $216,000 favorable
b. $32,400 favorable
c. $89,100 unfavorable
d. $121,500 unfavorable
138. Based on the following information, calculate the direct materials price variance.
Actual costs 3,590 pounds at $8.00
Standard costs 4,100 pounds at $6.00
a. $7,700 favorable
b. $8,200 favorable
c. $7,180 unfavorable
d. $8,100 unfavorable
139. Which of the following formula is used to calculate direct labor rate variance?
a. Actual costs + (Actual hours × Standard rate)
b. Actual costs – Standard cost
c. (Actual hours × Standard rate) – Standard costs
d. Actual costs – (Actual hours × Standard rate)
140. Brown Inc.’s production budget for Product X for the year ended December 31 is as follows:
Product X
Sales 640,000 units
Plus desired ending inventory 85,000
Total 725,000
Less estimated beginning inventory, Jan. 1 90,000
Total production 635,000
In Brown’s production operations, Materials A, B, and C are required to make Product X. The quantities of direct
materials expected to be used for each unit of product are as follows:
Product X
Material A .50 pound per unit
Material B 1.00 pound per unit
Material C 1.20 pound per unit
The prices of direct materials are as follows:
Material A $0.60 per pound
Material B $1.70 per pound
Material C $1.50 per pound
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Prepare a direct materials purchases budget for Product X.
141. Based on the following production and sales data of Jackson Co. for March of the current year, prepare (a) a sales
budget and (b) a production budget.
Product T Product X
Estimated inventory, March 1 26,000 units 18,000 units
Desired inventory, March 31 32,000 units 15,000 units
Expected sales volume:
Area I
320,000 units
260,000 units
Area II 190,000 units 130,000 units
Unit sales price $4 $12
142. Standard and actual costs for direct labor for the manufacture of 1,500 units of product were as follows:
Actual costs 450 hours @ $17.00
Standard costs 455 hours @ $16.50
Determine the (a) time variance, (b) rate variance, and (c) total direct labor cost variance.
143. Trapp Co. was organized on August 1 of the current year. Projected sales for the next three months are as follows:
August $100,000
September 185,000
October 225,000
The company expects to sell 40% of its merchandise for cash. Of the sales on account, one-third are expected to be
collected in the month of the sale and the remainder in the following month.
Prepare a schedule indicating cash collections of accounts receivable for August, September, and October 20Y8.
144. Prepare a monthly flexible selling expense budget for Podism Company for sales volumes of $270,000, $350,000,
and $480,000, based on the following data:
Sales commissions 7% of sales
Sales manager’s salary $62,000 per month
Advertising expense $70,000 per month
Shipping expense 2% of sales
Miscellaneous selling expense $2,500 per month plus 1/2% of sales
145. Microfix Company manufactures two models of Television, AR30 and AR33. Based on the following production
data for April of the current year, prepare a production budget for April 20Y8.
AR30 AR33
Estimated inventory (units), April 1 2,500 3,700
Desired inventory (units), April 30 3,700 3,700
Expected sales volume (units):
Eastern zone 8,200 11,500
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Midwest zone 13,000 17,500
Western zone 7,300 9,100
146. Compute the standard cost for one hat, based on the following standards for each hat:
Standard Material Quantity: 3/4 yard of fabric at $4.00 per yard
Standard Labor: 1 hour at $5.75 per hour
Factory Overhead: $2.90 per direct labor hour
147. Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows:
Actual costs 1,450 lbs. @ $8.10
Standard costs 1,500 lbs. @ $8.00
Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.
148. The following information is given for a company:
Process A Process B
Units passing inspection 8,800 units 3,000 units
Units entering process 10,000 units 5,000 units
Calculate the (a) process yield for Process A, (b) process yield for Process B, and (c) overall process yield.
149. The treasurer of Unisyms Company has accumulated the following budget information for the first two months of the
coming year:
March April
Sales $450,000 $520,000
Manufacturing costs 290,000 350,000
Selling and administrative expenses 41,400 46,400
Capital additions 250,000 —–
The company expects to sell about 35% of its merchandise for cash. Of sales on account, 80% are expected to be collected
in full in the month of the sale and the remainder in the month following the sale. One-fourth of the manufacturing costs
are expected to be paid in the month in which they are incurred and the other three-fourths in the following month.
Depreciation, insurance, and property taxes represent $6,400 of the probable monthly selling and administrative expenses.
Insurance is paid in February 20Y8, and a $40,000 installment on income taxes is expected to be paid in April 20Y8. Of
the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are
incurred, with the balance paid in the following month. Capital additions of $250,000 are expected to be paid in March
20Y8.
Current assets as of March 1 are composed of cash of $45,000 and accounts receivable of $51,000. Current liabilities as of
March 1 are composed of accounts payable of $121,500 ($102,000 for materials purchases and $19,500 for operating
expenses). Management desires to maintain a minimum cash balance of $20,000.
Prepare a monthly cash budget for March and April 20Y8.
150. Standard and actual costs for direct materials for the manufacture of 2,000 units of product were as follows:
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Actual costs 2,750 lbs. @ $8.10
Standard costs 2,800 lbs. @ $8.00
Determine the (a) quantity variance, (b) price variance, and (c) total direct materials cost variance.
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