14

Grason Corporation is preparing a budgeted balance sheet for 2018. The retained earnings balance at December 31, 2017 was $533,500. The 2018 budgeted income statement shows expected net income of $112,000. The company expects to declare dividends during 2018 amounting to $40,000. The expected balance in retained earnings on the 2018 budgeted balance sheet is: Multiple Choice O $605,500. $645,500. O $493,500. $533,500. o $685,500. A company uses the following standard costs to produce a single unit of output. Direct materials Direct labor Manufacturing overhead 6 pounds at $0.90 per pound 0.5 hour at $12.00 per hour 0.5 hour at $4.80 per hour = $5.40 = $6.00 = $2.40 During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct materials price variance for the month was: Multiple Choice $5,800 unfavorable $1,800 favorable $6,000 unfavorable $1,000 favorable $1,800 unfavorable Graham Corp. has 1,000 cartons of oranges that were harvested at a cost of $30,000. The oranges can be sold as is for $35,760. The oranges can be processed further into orange juice at an additional cost of $12,950 and be sold at a price of $52,300. The net benefit (additional income) from processing the oranges into orange juice instead of selling as is would be: Multiple Choice $3,590 O $(3,590). O $(16,540). O O $39,350 $39,350. O O $16,540. Markson Company had the following results of operations for the past year: $ 167,200 Sales (8,000 units at $20.90) Variable manufacturing costs Fixed manufacturing costs Variable administrative expenses Fixed selling and administrative expenses Operating income $89,600 15,900 15,600 20,900 (142,000) $ 25, 200 A foreign company offers to buy 2,000 units at $15.35 per unit. In addition to variable manufacturing and administrative costs, selling these units would increase fixed overhead by $1,690 for the purchase of special tools. Markson's annual productive capacity is 12,000 units. If Markson accepts this additional business, its profits will: Multiple Choice Decrease by $1,690. Decrease by $4,800. Increase by $4,400. Decrease by $6,090. Increase by $2,710