95.Assume a company is considering buying 10,000 units of a component part rather than making them. A supplier has agreed to sell the company 10,000 units for a price of $40 per unit. The companys accounting system reports the following costs of making the part:

	Per Unit					10,000 Units per Year
Direct materials		$	18				$	180,000
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		$	44				$	440,000

One-half of the traceable fixed manufacturing overhead relates to supervisory salaries and the remainder relates to depreciation of equipment with no salvage value. If the company chooses to buy this component part from a supplier, then the supervisor who oversees its production would be discharged. If the company begins buying the part from a supplier, it can use freed up capacity to produce and sell 2,150 more units of another product that earns a contribution margin per unit of $7.50. What is the financial advantage (disadvantage) of buying 10,000 units from the supplier?

Multiple Choice

• $(3,875)

• $(23,875)

• $(32,150)

• $(60,000)

96.

Assume that a company provided the following cost formulas for three of its expenses (where q refers to the number of hours worked):

Rent (fixed)		$3,000
Supplies (variable)		$4.00	q
Utilities (mixed)		$175 + $0.75	q

The companys planned level of activity was 2,000 hours and its actual level of activity was 1,900 hours. How much utilities expense would be included in the planning budget?

rev: 06_25_2020_QC_CS-208650

Multiple Choice

• $1,500

• $1,700

• $1,600

• $1,675

97.

Assume the following information appears in the standard cost card for an enterprise that makes only one product:

	Standard Quantity or Hours		Standard Price or Rate			Standard Cost
Direct materials	5	pounds	$	11.00	per pound	$	55.00
Direct labor	2	hours	$	17.00	per hour	$	34.00
Variable manufacturing overhead	2	hours	$	3.00	per hour	$	6.00

During the most recent period, the following additional information was available:

• 20,000 pounds of material was purchased at a cost of $10.50 per pound.
• All of the material that was purchased was used to produce 3,900 units.
• 8,000 direct labor-hours were recorded at a total cost of $132,000.

What is the direct labor spending variance?

Multiple Choice

• $3,300 U

• $3,300 F

• $600 U

• $600 F

98.Assume a merchandising companys estimated sales for January, February, and March are $115,000, $135,000, and $125,000, respectively. Its cost of goods sold is always 45% of its sales. The company always maintains ending merchandise inventory equal to 20% of next months cost of goods sold. It pays for 20% of its merchandise purchases in the month of the purchase and the remaining 80% in the subsequent month. What is the accounts payable balance at the end of February?

Multiple Choice

• $43,990

• $47,880

• $11,970

• $42,840

99.

Assume that a companys planned level of activity was 2,000 units and its actual level of activity was 2,200 units. The spending variance for one of its fixed expenses was $200 favorable. The actual amount of the fixed expense was $10,650. What amount of this expense would be included in the companys planning budget?

rev: 06_25_2020_QC_CS-208650

Multiple Choice

• $9,850

• $11,850

• $10,850

• $8,850

100.

Assume that a company provided the following cost formulas for three of its expenses (where q refers to the number of hours worked):

Rent (fixed)		$3,000
Supplies (variable)		$4.00q
Utilities (mixed)		$150 + $0.75q

The companys planned level of activity was 2,000 hours and its actual level of activity was 1,900 hours. If these are the companys only three expenses and the company uses revenue formula of $8.95q for budgeting purposes, what net operating income would appear in the companys flexible budget?

Multiple Choice

• $5,080

• $4,980

• $4,930

• $4,830