Question
1. Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls.
1. Tommy's Toys produces two types of toys: trains and dolls. Tommy's uses stainless steel to manufacture the trains and plastic to manufacture the dolls. Information regarding the usage of steel and plastic for the past year follows:
Product Names | Steel | Plastic |
Direct materials information | ||
Standard pounds per unit | 2 lb. | 1.0 lb. |
Standard Price (SP) per pound | $3.00 | ? |
Actual Quantity (AQ) used per unit | 3.0 lb. | 3.00 lb. |
Actual Price (AP) paid for material | $1.75 | $2.25 |
Actual Quantity Purchased (AQP) and used | 2,800 lb. | 800 lb. |
Price variance | ? | $1,200 F |
Quantity variance | $900 U | ? |
Flexible budget variance | ? | $412 F |
Number of units produced | 300 | 525 |
What is the direct materials flexible budget variance for steel used to manufacture the trains?
A. $4,400 favorable | |
B. $2,600 unfavorable | |
C. $2,600 favorable | |
D. $4,400 unfavorable |
2. Sparky the Electrician specializes in rewiring historic houses. Sparky recently purchased a new wire-pulling device that will decrease the time needed to complete each job and increase total revenues. The device will cost $5,577 and will increase net cash flows by $1,690 per year. The new device has a useful life of 7 years and a residual value of $0. What is the payback period for the new wire-pulling device?
A. 3.12 years | |
B. 2.80 years | |
C. 3.48 years | |
D. 3.30 years |
3. Sharon Corporation collects 10% in the second month following sale, 40% in the month following sale, and 40% of a month's sales in the month of sale. The company has found that 10% of their sales are uncollectible. Budgeted sales for the upcoming four months are:
August budgeted sales | $280,000 |
September budgeted sales | $350,000 |
October budgeted sales | $380,000 |
November budgeted sales | $240,000 |
The amount of cash that will be collected in November is budgeted to be
A. $316,000 | |
B. $96,000 | |
C. $283,000 | |
D. $216,000 |
4. Suppose Whole Foods is considering investing in warehouse-management software that costs $900,000; has $40,000 residual value; and should lead to cash cost savings of $180,000 per year for its 5-year life. In calculating the ARR, which of the following figures should be used as the equation's denominator?
A.$220,000 | |||||||||
B. $180,000 | |||||||||
C. $40,000 | |||||||||
D. $900,000 5. All of the following budgets are prepared by merchandising companies except
|
6. The Stallard Corporation manufactures Product X that consumes a large amount of overhead. For the month of October, Stallard produced 14,200 units of Product X and incurred actual overhead costs of $269,000. The standard costs developed for Product X by Stallard follow:
Standard direct labor hours per unit | 4 |
Standard direct labor rate per hour | $11.00 |
|
|
Standard overhead hours per unit | 8 |
Standard overhead rate per hour | $4.80 |
What was the total variable overhead variance for Product X in October?
$276,280 favorable | |
$200,840 favorable | |
$276,280 unfavorable | |
$200,840 unfavorable |
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