1. At Lighthouse Books Publishers, the number of daily journals to be produced in December is 25,000. Each book requires .25 hours of hands-on labor, and the standard rate of pay for these laborers is $10 per hour. What will be the budgeted direct labor cost at Lighthouse for the month of December?

a. $25,000 b. $37,500 c. $62,500

2. At Jones Co., sales for the third and fourth quarters of 2005 are budgeted to be 10,000 units and 12,000 units, respectively. Management has determined that ending inventory in each quarter should be 25% of the following quarters sales. In preparing the Production Budget for Jones Co., the number of units to be produced in the third quarter of 2005 are (HINT: Assume that the second quarter ending inventory was budgeted at 25% of the third quarters sales):

a.10,500 b. 9,500 c. 13,000.

3. Haskell Co. plans to produce 10,000 shirts in October and 9,000 in November. Each shirt requires 2 standard yards of fabric, at a cost of $5.00 per yard. The inventory of fabric at the beginning of October will be 2,000 yards. If Haskell would like to have an inventory of fabric at the end of each month equal to 10% of the next yardage needs, what will be the budgeted cost of fabric to be purchased during the month of October?

a.$94,500 b. $101,000 c. $99,000

4. At Jackson Co. the budgeted direct labor hours for the 1^st quarter is 3,875 hours. Variable overhead is budgeted to be $3.76 per hour and fixed overhead is budgeted to be $16,300. What is the total budgeted overhead cost for the 1^st quarter?

a. $30,870 b. $16,300 c. 14,570

5. If the labor mix at a company is changed by placing highly trained personnel in positions formerly held by assistants, the expected impact on the labor variances would be:

a. The labor rate variance would be more favorable, but the labor efficiency variance would be less favorable.

b. The labor rate variance would be less favorable, but the labor efficiency variance would be more favorable.

c. Both the labor rate and labor efficiency variances would be more favorable.

d. Both the labor rate and labor efficiency variances would be less favorable.

6. Wasteful usage of variable overhead costs such as indirect materials and utilitiesi.e., misplacing or spilling indirect materials or leaving machines running and doors to refrigerated areas open will cause which of the following variances to be unfavorable?

a. Materials Price Variance

b. Materials Quantity Variance

c. Variable Overhead Rate (Spending) Variance

d. Variable Overhead Efficiency Variance