2

Violetta Inc. in the US manufactures plastic storage boxes. Management has determined that each medium-sized box has a standard materials cost of $1.20 when 4 pounds of raw material at a cost of $.30 per pound are used.

The static budget for the month of March showed an estimated production of 15 000 boxes in March. During March, 17 000 boxes were actually produced.

The actual cost for each box was $1.56 when 3.9 pounds of raw material at a cost of $.40 per pound were purchased and used.

What should be the total direct materials cost according to Violettas flexible budget for March?

1. $26 520
2. $18 000
3. $20 400
4. $23 400

QUESTION 3

Taylor Products Inc. has an $8000 unfavourable flexible budget variance for October. If Octobers flexible budget net income was $175 000, which of the following statements is true?

1. Taylors static budget must have showed net income of $183 000.
2. Taylors static budget must have showed net income of $167 000.
3. Taylors actual net income must have been $183 000.
4. Taylors actual net income must have been $167 000.

QUESTION 5

US-based Chil Products Ltd. bottles and sells hot pepper sauce. In 2009, the company had expected to sell 60 000 bottles but actually bottled and sold 70 000 bottles.

The standard direct materials cost for each bottle is $0.28 comprised of 0.80 ounces at a cost of $0.35 per ounce. During 2009, 68 000 ounces of material were purchased out of which 55 000 ounces were used at a cost of $0.32 per ounce.

The direct materials price variance for 2009 was:

1. $1650 U
2. $2040 F
3. $2040 U
4. $1650 F

QUESTION 6

Meow Products Ltd. in the US produces and sells scratching posts for cats. In the current year, the company had expected to sell 12 000 posts but actually produced and sold 10 000 posts.

The following information is available regarding the standard cost to produce a single post:

Direct materials: 3 feet @ 1.75 per foot

Direct labour: 15 minutes @ $0.30 per minute

In the current year, 38 000 feet of material were purchased out of which 35 000 feet were used at a cost of $1.55 per foot, and 160 000 direct labour minutes were incurred at a cost of $0.32 per minute.

The companys direct materials price variance for the current year was:

1. $7000 U
2. $2350 F
3. $7600 F
4. $4100 U