41) Kerekes Manufacturing Corporation has prepared the following overhead budget for next
month.
Activity level
2,500
machine-hours
Variable overhead costs:
Supplies
$
12,250
Indirect labor
22,000
Fixed overhead costs:
Supervision
15,500
Utilities
5,500
Depreciation
6,500
Total overhead cost
$
61,750
–
The company’s variable overhead costs are driven by machine-hours.
What would be the total budgeted overhead cost for next month if the activity level is 2,400
machine-hours rather than 2,500 machine-hours?
A) $59,830
B) $59,280
C) $60,380
D) $61,750
Machine-hours (q)
Supplies ($4.90q)
$
Indirect labor ($8.80q)
Supervision ($15,500)
Utilities ($5,500)
Depreciation ($6,500)
Total overhead cost
$
–
42) Thilking Midwifery’s cost formula for its wages and salaries is $2,140 per month plus $454 per
birth. For the month of August, the company planned for activity of 102 births, but the actual level
of activity was 100 births. The actual wages and salaries for the month was $47,660. The wages
and salaries in the flexible budget for August would be closest to:
A) $47,540
B) $48,448
C) $47,498
D) $47,660
43) Bonavita Corporation is a service company that measures its output by the number of
customers served. The company has provided the following fixed and variable cost estimates that
it uses for budgeting purposes.
Fixed Element per
Month
Variable Element
per Customer
Served
Revenue
$
4,200
Employee salaries and wages
$
41,300
$
1,200
Travel expenses
$
500
Other expenses
$
33,000
–
When the company prepared its planning budget at the beginning of July, it assumed that 33
customers would have been served.
The amount shown for net operating income in the planning budget for July would have been
closest to:
A) ($4,300)
B) ($1,414)
C) ($1,200)
D) $8,200
Customers served (q)
Revenue ($4,200q)
Expenses:
Employee salaries and wages ($41,300 + $1,200q)
80,900
Travel expenses ($500q)
16,500
Other expenses ($33,000)
33,000
Total expenses
Net operating income
–
44) At Jacobson Company, indirect labor is a variable cost that varies with direct labor-hours. Last
month’s performance report showed that actual indirect labor cost totaled $5,780 for the month and
that the associated spending variance was $245 F. If 24,100 direct labor-hours were actually
worked last month, then the flexible budget cost formula for indirect labor must be (per direct
labor-hour):
A) $0.20
B) $0.25
C) $0.30
D) $0.35
45) Cardero Midwifery’s cost formula for its wages and salaries is $2,280 per month plus $348 per
birth. For the month of August, the company planned for activity of 118 births, but the actual level
of activity was 116 births. The actual wages and salaries for the month was $44,120. The wages
and salaries in the planning budget for August would be closest to:
A) $44,881
B) $44,120
C) $43,344
D) $42,648
46) Sherburne Snow Removal’s cost formula for its vehicle operating cost is $2,510 per month plus
$371 per snow-day. For the month of March, the company planned for activity of 18 snow-days,
but the actual level of activity was 17 snow-days. The actual vehicle operating cost for the month
was $8,460. The vehicle operating cost in the flexible budget for March would be closest to:
A) $8,817
B) $9,188
C) $8,460
D) $8,678
47) Faulks Corporation is a shipping container refurbishment company that measures its output by
the number of containers refurbished. The company has provided the following fixed and variable
cost estimates that it uses for budgeting purposes.
Fixed Element
per Month
Variable Element
per Container
Refurbished
Revenue
$
5,400
Employee salaries and wages
$
46,300
$
1,200
Refurbishing materials
$
700
Other expenses
$
32,400
–
When the company prepared its planning budget at the beginning of August, it assumed that 23
containers would have been refurbished. However, 26 containers were actually refurbished during
August.
The amount shown for total expenses in the planning budget for August would have been closest
to:
A) $111,904
B) $126,500
C) $122,400
D) $128,100
Containers refurbished (q)
Expenses:
Employee salaries and wages ($46,300 + $1,200q)
73,900
Refurbishing materials ($700q)
16,100
Other expenses ($32,400)
32,400
Total expenses
–
48) Barsness Corporation is an oil well service company that measures its output by the number of
wells serviced. The company has provided the following fixed and variable cost estimates that it
uses for budgeting purposes and the actual results of operations for November.
Fixed Element per
Month
Variable Element
per Well Serviced
Actual Total
for
November
Revenue
$
4,400
$
190,100
Employee salaries and wages
$
56,800
$
1,100
$
103,400
Servicing materials
$
700
$
29,800
Other expenses
$
34,800
$
35,300
–
When the company prepared its planning budget at the beginning of November, it assumed that 39
wells would have been serviced. However, 43 wells were actually serviced during November.
The amount shown for “Other expenses” in the planning budget for November would have been
closest to:
A) $34,800
B) $35,300
C) $32,016
D) $35,050
Budget
Wells serviced (q)
Other expenses ($34,800 fixed)
$
34,800
–
49) Ostler Hotel bases its budgets on guest-days. The hotel’s static budget for April appears below:
Budgeted number of guest-days
8,700
Budgeted variable overhead costs:
Supplies (@$7.00 per guest-day)
$
60,900
Laundry (@$3.80 per guest-day)
33,060
Total variable overhead cost
93,960
Budgeted fixed overhead costs:
Wages and salaries
80,910
Occupancy costs
38,280
Total fixed overhead cost
119,190
Total overhead cost
$
213,150
–
The total overhead cost at an activity level of 9,700 guest-days per month should be:
A) $213,150
B) $237,650
C) $223,950
D) $224,920
Guest-days (q)
9,700
Supplies ($7.00q)
$
67,900
Laundry ($3.80q)
36,860
Wages and salaries
80,910
Occupancy costs
38,280
Total budgeted overhead cost
$
223,950
–
50) Magliacane Corporation is a service company that measures its output by the number of
customers served. The company has provided the following fixed and variable cost estimates that
it uses for budgeting purposes.
Fixed Element per
Month
Variable Element
per Customer
Served
Revenue
$
4,300
Employee salaries and wages
$
58,100
$
1,200
Travel expenses
$
700
Other expenses
$
31,900
–
When the company prepared its planning budget at the beginning of February, it assumed that 39
customers would have been served. However, 35 customers were actually served during February.
The revenue in the company’s flexible budget for February would have been closest to:
A) $170,709
B) $167,700
C) $153,200
D) $150,500
Customers served (q)
Revenue ($4,300q)
$
–
51) Sharifi Hospital bases its budgets on patient-visits. The hospital’s static budget for October
appears below:
Budgeted number of patient-visits
8,500
Budgeted variable overhead costs:
Supplies (@$4.70 per patient-visit)
$
39,950
Laundry (@$7.80 per patient-visit)
66,300
Total variable overhead cost
106,250
Budgeted fixed overhead costs:
Wages and salaries
50,150
Occupancy costs
84,150
Total fixed overhead cost
134,300
Total budgeted overhead cost
$
240,550
–
The total overhead cost at an activity level of 9,200 patient-visits per month should be:
A) $260,360
B) $250,070
C) $249,300
D) $240,550
Patient-visits (q)
9,200
Supplies ($4.70q)
$
43,240
Laundry ($7.80q)
71,760
Wages and salaries ($50,150)
50,150
Occupancy costs ($84,150)
84,150
Total budgeted overhead cost
$
249,300
–
52) Picozzi Snow Removal’s cost formula for its vehicle operating cost is $2,060 per month plus
$306 per snow-day. For the month of January, the company planned for activity of 16 snow-days,
but the actual level of activity was 18 snow-days. The actual vehicle operating cost for the month
was $7,720. The vehicle operating cost in the planning budget for January would be closest to:
A) $6,956
B) $6,862
C) $7,720
D) $7,568
53) Loughry Catering uses two measures of activity, jobs and meals, in the cost formulas in its
budgets and performance reports. The cost formula for catering supplies is $530 per month plus
$114 per job plus $16 per meal. A typical job involves serving a number of meals to guests at a
corporate function or at a host’s home. The company expected its activity in October to be 25 jobs
and 234 meals, but the actual activity was 20 jobs and 233 meals. The actual cost for catering
supplies in October was $6,600. The catering supplies in the flexible budget for October would be
closest to:
A) $6,600
B) $5,699
C) $6,538
D) $7,124
54) Wember Catering uses two measures of activity, jobs and meals, in the cost formulas in its
budgets and performance reports. The cost formula for catering supplies is $400 per month plus
$82 per job plus $10 per meal. A typical job involves serving a number of meals to guests at a
corporate function or at a host’s home. The company expected its activity in September to be 20
jobs and 144 meals, but the actual activity was 16 jobs and 141 meals. The actual cost for catering
supplies in September was $3,100. The catering supplies in the planning budget for September
would be closest to:
A) $3,875
B) $3,480
C) $3,100
D) $3,122
55) Petrus Framing’s cost formula for its supplies cost is $2,300 per month plus $6 per frame. For
the month of March, the company planned for activity of 861 frames, but the actual level of
activity was 856 frames. The actual supplies cost for the month was $7,790. The activity variance
for supplies cost in March would be closest to:
A) $324 U
B) $30 F
C) $324 F
D) $30 U
56) Taussig Snow Removal’s cost formula for its vehicle operating cost is $1,880 per month plus
$394 per snow-day. For the month of February, the company planned for activity of 13 snow-days,
but the actual level of activity was 14 snow-days. The actual vehicle operating cost for the month
was $7,250. The activity variance for vehicle operating cost in February would be closest to:
A) $394 F
B) $248 U
C) $394 U
D) $248 F
57) Scharfenberg Corporation is an oil well service company that measures its output by the
number of wells serviced. The company has provided the following fixed and variable cost
estimates that it uses for budgeting purposes and the actual results of operations for March.
Fixed Element per
Month
Variable Element
per Well Serviced
Actual Total
for March
Revenue
$
5,700
$
145,100
Employee salaries and wages
$
50,300
$
1,200
$
79,300
Servicing materials
$
700
$
12,200
Other expenses
$
31,600
$
31,400
–
When the company prepared its planning budget at the beginning of March, it assumed that 23
wells would have been serviced. However, 25 wells were actually serviced during March.
The activity variance for “Other expenses” for March would have been closest to:
A) $0
B) $200 F
C) $2,712 F
D) $200 U
Wells serviced (q)
25
23
Other expenses ($31,600)
31,600
31,600
$
–
36
58) Wisseman Corporation is a shipping container refurbishment company that measures its
output by the number of containers refurbished. The company has provided the following fixed
and variable cost estimates that it uses for budgeting purposes.
Fixed Element per
Month
Variable Element
per Container
Refurbished
Revenue
$
5,300
Employee salaries and wages
$
55,100
$
900
Refurbishing materials
$
600
Other expenses
$
41,200
–
When the company prepared its planning budget at the beginning of September, it assumed that 28
containers would have been refurbished. However, 26 containers were actually refurbished during
September.
The activity variance for total expenses for September would have been closest to:
A) $400 F
B) $400 U
C) $3,000 U
D) $3,000 F
Containers refurbished (q)
Expenses:
Employee salaries and
wages
($55,100 + $900q)
F
Refurbishing materials
($600q)
Other expenses ($41,200)
0
Total expenses
135,300
$
F
–
59) Pattison Corporation is a service company that measures its output by the number of customers
served. The company has provided the following fixed and variable cost estimates that it uses for
budgeting purposes.
Fixed Element per
Month
Variable Element
per Customer
Served
Revenue
$
5,500
Employee salaries and wages
$
46,300
$
1,000
Travel expenses
$
500
Other expenses
$
32,500
–
When the company prepared its planning budget at the beginning of May, it assumed that 20
customers would have been served. However, 17 customers were actually served during May.
The activity variance for “Travel expenses” for May would have been closest to:
A) $1,500 U
B) $1,500 F
C) $2,000 F
D) $2,000 U
Customers served (q)
Travel expenses ($500q)
8,500
10,000
$
F
–
60) Ekholm Corporation is a shipping container refurbishment company that measures its output
by the number of containers refurbished. The company has provided the following fixed and
variable cost estimates that it uses for budgeting purposes.
Fixed Element per
Month
Variable Element
per Container
Refurbished
Revenue
$
4,400
Employee salaries and wages
$
44,900
$
1,000
Refurbishing materials
$
700
Other expenses
$
30,800
–
When the company prepared its planning budget at the beginning of December, it assumed that 30
containers would have been refurbished. However, 35 containers were actually refurbished during
December.
The activity variance for “Employee salaries and wages” for December would have been closest
to:
A) $5,000 U
B) $5,000 F
C) $4,000 U
D) $4,000 F
Containers refurbished (q)
Employee salaries and wages
($44,900 + $1,000q)
–
61) Bade Midwifery’s cost formula for its wages and salaries is $1,220 per month plus $246 per
birth. For the month of October, the company planned for activity of 106 births, but the actual level
of activity was 102 births. The actual wages and salaries for the month was $27,250. The activity
variance for wages and salaries in October would be closest to:
A) $46 U
B) $984 F
C) $984 U
D) $46 F
62) Rudick Corporation is an oil well service company that measures its output by the number of
wells serviced. The company has provided the following fixed and variable cost estimates that it
uses for budgeting purposes.
Fixed Element per
Month
Variable Element
per Well
Serviced
Revenue
$
4,500
Employee salaries and wages
$
47,400
$
1,200
Servicing materials
$
700
Other expenses
$
29,500
–
When the company prepared its planning budget at the beginning of July, it assumed that 34 wells
would have been serviced. However, 36 wells were actually serviced during July.
The activity variance for revenue for July would have been closest to:
A) $10,800 U
B) $9,000 F
C) $9,000 U
D) $10,800 F
Wells serviced (q)
Revenue ($4,500q)
$
153,000
$
F
–