1. The budget or schedule that provides necessary input data for the direct-labor budget is the
A. production budget. B. raw materials purchases budget.
C. schedule of cash collections. D. cash budget.
A. production budget. B. raw materials purchases budget.
C. schedule of cash collections. D. cash budget.
2. The company plans to sell 22,000 units of Product WZ in June. The finished-goods inventories on June 1 and June 30 are budgeted to be 100 and 400 units, respectively. The direct labor hours are 11,000 and the direct labor rate is $10.50. Budgeted direct-labor costs for June would be A. $234,150. B. $117,075. C. $462,000. D. $455,700.
3-Werber Clinic uses client visits as its measure of activity. During January, the clinic budgeted for 2,700 client visits, but its actual level of activity was 2,730 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:
Data used in budgeting:
Fixed element Variable element
Per month per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results
for January:
Revenue $93,408- Personnel expenses - $46,251-Medical supplies $19,348
Occupancy expenses $9,508 - Administrative expenses $4,772
3. The activity variance for administrative expenses in January would be closest to
A. $8 U. B. $12 F. C. $8 F. D. $12 U.
4-Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
Standard Standard Cost
Quantity per bag
Direct material 20 pounds $8.00
Direct labor 0.1 hours $1.10
Variable overhead 0.1 hours $0.40
The company had no beginning inventories of any kind on January 1. Variable overhead is applied to production on the basis of standard direct-labor hours. During January, the company recorded the following activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of $32,300
• Direct-labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on January 31: 3,000 pounds
4. The labor rate variance for January is A. $585 F. B. $475 U. C. $585 U. D. $475 F.
5. There are various budgets within the master budget. One of these budgets is the production budget. Which of the following best describes the production budget?
A. It's calculated based on the sales budget and the desired ending inventory.
B. It details the required raw materials purchases.
C. It summarizes the costs of producing units for the budget period.
D. It details the required direct-labor hours.
6-Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for 3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December:
Data used in budgeting:
Fixed element Variable element
per month per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results
for December:
Revenue $96,299- Personnel expenses $51,009- Medical supplies $17,425
Occupancy expenses $9,240- Administrative expenses $3,239
6. The activity variance for personnel expenses in December would be closest to
A. $71 U. B. $2,361 U. C. $71 F. D. $2,361 F.
7-Werber Clinic uses client visits as its measure of activity. During January, the clinic budgeted for 2,700 client visits, but its actual level of activity was 2,730 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:
Data used in budgeting:
Fixed element Variable element
per month per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results
for January:
Revenue $93,408-- Personnel expenses $46,251-- Medical supplies $19,348
Occupancy expenses $9,508-- Administrative expenses $4,772
7. The activity variance for personnel expenses in January would be closest to
A. $261 U. B. $661 F. C. $261 F. D. $661 U.
8. Manufacturing Cycle Efficiency (MCE) is computed as
A. Value-Added Time divided by Delivery Cycle Time.
B. Process Time divided by Delivery Cycle Time.
C. Throughput Time divided by Delivery Cycle Time.
D. Value-Added Time divided by Throughput Time.
9-Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for 3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December:
Data used in budgeting:
Fixed element Variable element
per month per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results
for December:
Revenue $96,299----Personnel expenses $51,009----Medical supplies $17,425
Occupancy expenses $9,240--Administrative expenses $3,239
9. The personnel expenses in the planning budget for December would be closest to
A. $51,147. B. $51,009. C. $53,299. D. $53,370.
10- Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
Standard Standard Cost
Quantity per bag
Direct material 20 pounds $8.00
Direct labor 0.1 hours $1.10
Variable overhead 0.1 hours $0.40
The company had no beginning inventories of any kind on January 1. Variable overhead is applied to production on the basis of standard direct-labor hours. During January, the company recorded the following activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of $32,300
• Direct-labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on January 31: 3,000 pounds
10. The materials quantity variance for January is A. $300 U. B. $800 U. C. $300 F.D. $750F.
11-Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
Standard Standard Cost
Quantity per bag
Direct material 20 pounds $8.00
Direct labor 0.1 hours $1.10
Variable overhead 0.1 hours $0.40
The company had no beginning inventories of any kind on January 1. Variable overhead is applied to production on the basis of standard direct-labor hours. During January, the company recorded the following activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of $32,300
• Direct-labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on January 31: 3,000 pounds
11. The total variance (both rate and efficiency) for variable overhead for January is
A. $125 F. B. $40 F. C. $85 F. D. $100 U.
12. Which of the following will not result in an increase in return on investment (ROI), assuming other factors remain the same?
A. An increase in operating assets B. An increase in sales
C. A reduction in expenses D. An increase in net operating income
13. Coles Company, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows:
August 14,000 units. September 14,500 units. October 15,500 units
November 12,600 units December 11,900 units
The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month's production needs. On July 31, this requirement wasn't met because only 2,500 yards of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year.
The total cost of Material K to be purchased in August is
A. $33,840. B. $40,970.C. $48,200. D. $42,300.
14. The LFM Company makes and sells a single product, Product T. Each unit of Product T requires 1.3 hours of direct labor at a rate of $9.10 per direct-labor hour. LFM Company needs to prepare a direct-labor budget for the second quarter of next year. The budgeted direct-labor cost per unit of Product T would be. A. $11.83. B. $7.00. C. $9.10. D. $10.40.
15. Division X of Charter Corporation makes and sells a single product which is used by manufacturers of fork lift trucks. Presently it sells 12,000 units per year to outside customers at $24 per unit. The annual capacity is 20,000 units and the variable cost to make each unit is $16. Division Y of Charter Corporation would like to buy 10,000 units a year from Division X to use in its products. There would be no cost savings from transferring the units within the company rather than selling them on the outside market. What should be the lowest acceptable transfer price from the perspective of Division X? A. $16.00 B. $24.00 C. $21.40 D. $17.60
16. Vandall Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 7,300 units, but its actual level of activity was 7,340 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April:
Data used in budgeting:
Fixed element Variable element
per month per unit
Revenue ___-___ $35.40
Direct labor 0 $3.30
Direct materials 0 15.90
Manufacturing overhead 49,200 1.20
Selling and
Administrative expenses 26,600 0.10
Total expenses $75,800 $20.50
Actual results for April:
Revenue $254,146. - Direct labor $24,722.-Direct materials $116,496
Manufacturing overhead $59,608. - Selling and administrative expenses $26,494
The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for April would be closest to. A. $6,144 U. B. $6,144 F. C. $6,740 F. D. $6,740 U.
17-Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for 3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December:
Data used in budgeting:
Fixed element Variable element
per month per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results for December:
Revenue $96,299 - Personnel expenses $51,009 - Medical supplies $17,425
Occupancy expenses $9,240- Administrative expenses $3,239
17. The spending variance for medical supplies in December would be closest to
A. $680 F. B. $680 U. C. $725 F. D. $725 U.
18-The Adams Company, a merchandising firm, has budgeted its activity for November according to the following information:
• Sales were at $450,000, all for cash.
• Merchandise inventory on October 31 was $200,000.
• The cash balance on November 1 was $18,000.
• Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash.
• Budgeted depreciation for November is $25,000.
• The planned merchandise inventory on November 30 is $230,000.
• The cost of goods sold is 70% of the selling price. • All purchases are paid for in cash.
18. The budgeted net income for November is A. $135,000. B. $50,000. C. $75,000.
D. $68,000.
19. The Charade Company is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable factory overhead is $5.00 per direct-labor hour; the budgeted fixed factory overhead is $75,000 per month, of which $15,000 is factory depreciation. If the budgeted direct-labor time for December is 8,000 hours, then total budgeted factory overhead per direct-labor hour (rounded) is
A. $16.25. B. $12.50. C. $14.38. D. $9.38.
20. The cash budget must be prepared before you can complete the
A. raw materials purchases budget.
B. schedule of cash disbursements.
C. production budget.
D. budgeted balance sheet.
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