1. Sarnia Corporation had a favourable direct labour efficiency variance of $5,250 for the period just ended. The actual wage rate was $0.50 more than the standard rate of $10.00. If the companys standard hours allowed for actual production totalled 9,000 hours, how many hours did the firm actually work?

a) 9525hrs

b) 9600hrs

c)8500hrs

d)9500hrs

e)8475hrs

2. During January, 80,000 units were produced. The standard quantity of material allowed per unit was 3 pounds at a standard cost of $4 per pound. If there was an unfavourable quantity variance of $4,000, the actual quantity of materials used must have been:

a)241000 pounds

b)50000 pounds

c)84000 pounds

d)263000 pounds

e)76000 pounds

3. Molar Inc. currently sells 40,000 dental tools to its regular customers but it has a capacity to produce 50,000 tools. Its product sells for $30 per tool and the variable costs incurred are as follows on a per tool basis:

Direct materials $8

Direct labour $4

Sales commission $2

A customer has proposed a special order to purchase 10,000 tools at a special price of $20 per tool. If Molar accepts the order, the company will not have to pay its sales personnel their sales commissions. However, the company will incur a shipping cost of $3 per tool. If Molar accepts the special order, how would operating income be affected?

a) increase by $80,000

b) increase by $46,000

c) increase by $50,000

d) decrease by $120,000

e) decrease by $30,000

4. The degree of operating leverage used in CVP analysis is highest for firms with high

a) conversion costs

b) opportunity costs

c) prime costs

d) sunk costs

e) fixed costs