Question
1. The following information has been taken from the perpetual inventory system of Elite Mfg. Co. for the month ended August 31: Purchases of direct
1.
The following information has been taken from the perpetual inventory system of Elite Mfg. Co. for the month ended August 31:
Purchases of direct materials | $ | 80,000 | |
Direct materials used | $ | 68,500 | |
Direct labor costs assigned to production | $ | 28,000 | |
Manufacturing overhead costs incurred (and applied) | $ | 35,000 | |
Balances in inventory | August 31 | August 1 | ||||
Materials | $ | ? | 30,000 | |||
Work in Process | $ | 64,000 | 57,000 | |||
Finished Goods | $ | 69,000 | 49,000 | |||
Total manufacturing costs charged (debited) to Work in Process during August amount to:
Multiple Choice
-
$63,000.
-
$161,500.
-
Some other amount.
-
$131,500.
2. The following information is from the manufacturing budget and budgeted financial statements of Altman Corp.:
Direct materials inventory, 1/1 | $ | 83,000 | |
Direct materials inventory, 12/31 | $ | 99,000 | |
Direct materials budgeted for use during year | $ | 341,000 | |
Accounts payable to suppliers, 1/1 | $ | 51,000 | |
Accounts payable to suppliers, 12/31 | $ | 61,000 | |
For the year, budgeted purchases of direct materials amounted to:
Multiple Choice
-
$367,000.
-
$325,000.
-
$357,000.
-
$347,000.
3. Burns Industries currently manufactures and sells 24,000 power saws per month, although it has the capacity to produce 39,000 units per month. At the 24,000-unit-per-month level of production, the per-unit cost is $73, consisting of $44 in variable costs and $29 in fixed costs. Burns sells its saws to retail stores for $84 each. Allen Distributors has offered to purchase 5,400 saws per month at a reduced price. Burns can manufacture these additional units with no change in its present level of fixed manufacturing costs.
Using an incremental analysis approach, Burns should consider accepting this special order only if the price per unit offered by Allen is at least:
Multiple Choice
-
$84.
-
$44.
-
$29.
-
$73.
4. If monthly fixed costs are $32,000 and the contribution margin ratio is 25%, the monthly sales volume required to break even is:
Multiple Choice
-
$136,000.
-
$40,000.
-
$8,000.
-
$128,000.
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