91.

Assume a company is considering using available space to make 10,000 units of a component part that it has been buying from a supplier for a price of $40.25 per unit. The companys accounting system estimates the following costs of making the part:

	Per Unit					10,000 Units per Year
Direct materials		$	19				$	190,000
Direct labor			12					120,000
Variable manufacturing overhead			2					20,000
Fixed manufacturing overhead, traceable			8					80,000
Fixed manufacturing overhead, allocated			4					40,000
Total cost		$	47				$	450,000

One-half of the traceable fixed manufacturing overhead relates to a supervisor that would have to be hired to oversee production of the part. The remainder of the traceable fixed manufacturing overhead relates to depreciation of equipment that the company already owns. This equipment has 20,000 units of unused capacity, no resale value, and it does wear out through use. The allocated fixed manufacturing overhead relates to general overhead costs, such as the plant managers salary, lighting, heating and cooling costs, and plant insurance costs. What is the financial advantage (disadvantage) of making 10,000 units instead of buying them from the supplier?

Multiple Choice

• $(32,500)

• $20,000

• $32,500

• $(20,000)

92.

Assume the following:

• The standard price per pound is $2.20.
• The standard quantity of pounds allowed per unit of finished goods is 4 pounds.
• The actual quantity of materials purchased and used in production is 51,000 pounds.
• The actual purchase price per pound of materials was $2.25.
• The company produced 13,000 units of finished goods during the period.

What is the materials quantity variance?

Multiple Choice

• $2,250 F

• $2,200 U

• $2,250 U

• $2,200 F

93.

Assume that a companys planned level of activity was 3,500 units and its actual level of activity was 4,000 units. The spending variance for one of its mixed expenses was $700 favorable and its activity variance was $200 unfavorable. The total amount of this mixed cost included in the planning budget was $12,000. What is the actual total amount of this mixed expense?

Multiple Choice

• $11,500

• $11,100

• $11,900

• $13,300

94.

Assume that the cost formula for one of a companys mixed expenses is $10,000 + $4.00 per unit. The companys planned level of activity was 2,000 units and its actual level of activity was 2,210 units. The actual amount of this expense was $18,200. The activity variance for this expense is:

Multiple Choice

• $840 U.

• $240 U.

• $1,840 U.

• $600 F.