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Buis Corporation, which makes landing gears, has provided the following data for a recent month: Budgeted production 1,700 gears Standard machine-hours per gear 5.8 machine-hours

Buis Corporation, which makes landing gears, has provided the following data for a recent month:

Budgeted production

1,700

gears

Standard machine-hours per gear

5.8

machine-hours

Budgeted supplies cost

$6.40

per machine-hour

Actual production

1,300

gears

Actual machine-hours

8,000

machine-hours

Actual supplies cost (total)

$49,792

Required:

Determine the rate and efficiency variances for the variable overhead item supplies and indicate whether those variables are favorable or unfavorable. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Select one

Variable overhead rate variance

$

F, U, or None

Variable overhead efficiency variance

$

F, U, or None

The following labor standards have been established for a particular product:

Standard labor hours per unit of output

4.4

hours

Standard labor rate

$20.20

per hours

The following data pertain to operations concerning the product for the last month:

Actual hours worked

7,000

hours

Actual total labor cost

$142,100

Actual output

1,500

units

Required:

a.

What is the labor rate variance for the month? (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Labor rate variance

$

F, U, or None

b.

What is the labor efficiency variance for the month? (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Labor efficiency variance

$

F, U, or None

Silmon Corporation makes a product with the following standard costs:

Standard Quantity or Hours

Standard Price or Rate

Direct materials

5.5

grams

$

7.00

per gram

Direct labor

0.5

hours

$

14.00

per hour

Variable overhead

0.5

hours

$

2.00

per hour

In June the company produced 4,800 units using 27,650 grams of the direct material and 2,640 direct labor-hours. During the month the company purchased 24,700 grams of the direct material at a price of $6.80 per gram. The actual direct labor rate was $14.60 per hour and the actual variable overhead rate was $1.90 per hour. The materials price variance is computed when materials are purchased. Variable overhead is applied on the basis of direct labor-hours.

Required:

Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the price variance for materials is recognized at point of purchase: (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.)

Select

a.

Direct materials quantity variance

$

F, U, or None

b.

Direct materials price variance

$

F, U, or None

c.

Direct labor efficiency variance

$

F, U, or None

d.

Direct labor rate variance

$

F, U, or None

e.

Variable overhead efficiency variance

$

F, U, or None

f.

Variable overhead rate variance

$

F, U, or None

Fabio Corporation is considering eliminating a department that has a contribution margin of $26,000 and $74,000 in fixed costs. Of the fixed costs, $18,000 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:

a decrease of $48,000.

an increase of $48,000.

a decrease of $30,000.

an increase of $30,000.

Lusk Company produces and sells 14,100 units of Product X each month. The selling price of Product X is $23 per unit, and variable expenses are $17 per unit. A study has been made concerning whether Product X should be discontinued. The study shows that $74,000 of the $104,000 in fixed expenses charged to Product X would continue even if the product was discontinued. These data indicate that if Product X is discontinued, the company's overall net operating income would:

rev: 10_16_2014_QC_56453

decrease by $54,600 per month

increase by $19,400 per month

increase by $49,400 per month

decrease by $49,400 per month

The management of Heider Corporation is considering dropping product H58S. Data from the company's accounting system appear below:

Sales

$940,000

Variable expenses

$398,000

Fixed manufacturing expenses

$380,000

Fixed selling and administrative expenses

$260,000

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $253,000 of the fixed manufacturing expenses and $214,000 of the fixed selling and administrative expenses are avoidable if product H58S is discontinued. What would be the effect on the company's overall net operating income if product H58S were dropped?

Overall net operating income would decrease by $98,000.

Overall net operating income would increase by $75,000.

Overall net operating income would increase by $98,000.

Overall net operating income would decrease by $75,000.

Barrus Corporation makes 39,000 motors to be used in the productions of its power lawn mowers. The average cost per motor at this level of activity is as follows:

Direct materials

$9.80

Direct labor

$8.80

Variable manufacturing overhead

$3.60

Fixed manufacturing overhead

$4.55

This motor has recently become available from an outside supplier for $24.85 per motor. If Barrus decides not to make the motors, none of the fixed manufacturing overhead would be avoidable and there would be no other use for the facilities. If Barrus decides to continue making the motor, how much higher or lower will the company's net operating income be than if the motors are purchased from the outside supplier? Assume that direct labor is a variable cost in this company.

$74,100 lower

$243,750 higher

$103,350 higher

$177,450 higher

Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 21,000 cases of sauce each year but is currently only manufacturing and selling 19,500. The following costs relate to annual operations at 19,500 cases:

Total Cost

Variable manufacturing cost

$331,500

Fixed manufacturing cost

$65,000

Variable selling and administrative cost

$78,000

Fixed selling and administrative cost

$47,000

Gwinnett normally sells its sauce for $40 per case. A local school district is interested in purchasing Gwinnett's excess capacity of 1,500 cases of sauce but only if they can get the sauce for $20 per case. This special order would not affect regular sales or total fixed costs or variable costs per unit. If this special order is accepted, Gwinnett's profits for the year will:

increase by $750

decrease by $1,500

decrease by $19,500

decrease by $13,500

Wiacek Corporation has received a request for a special order of 5,000 units of product F65 for $28.50 each. Product F65's unit product cost is $27.85, determined as follows:

Direct materials

$3.35

Direct labor

8.65

Variable manufacturing overhead

7.75

Fixed manufacturing overhead

8.10

Unit product cost

$27.85

Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product F65 that would increase the variable costs by $4.80 per unit and that would require an investment of $15,000 in special molds that would have no salvage value.

This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. If the special order is accepted, the company's overall net operating income would increase (decrease) by:

$(35,750)

$4,750

$3,250

$(92,750)

A customer has requested that Inga Corporation fill a special order for 2,600 units of product K81 for $34 a unit. While the product would be modified slightly for the special order, product K81's normal unit product cost is $19.10:

Direct materials

$ 5.00

Direct labor

5.00

Variable manufacturing overhead

2.10

Fixed manufacturing overhead

7.00

Unit product cost

$19.10

Direct labor is a variable cost. The special order would have no effect on the company's total fixed manufacturing overhead costs. The customer would like modifications made to product K81 that would increase the variable costs by $1.50 per unit and that would require an investment of $18,000 in special molds that would have no salvage value.

This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. If the special order is accepted, the company's overall net operating income would increase (decrease) by:

$35,040

$(17,700)

$18,200

$(2,400)

Fahringer Corporation makes three products that use compound W, the current constrained resource. Data concerning those products appear below:

BJ

XS

QR

Selling price per unit

$104.82

$528.02

$557.96

Variable cost per unit

$ 81.92

$429.59

$419.89

Centiliters of compound W

2.50

11.20

11.40

Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. (Round your intermediate calculations to 2 decimal places.)

XS,BJ,QR

QR,BJ,XS

BJ,QR,XS

QR,XS,BJ

Consider the following production and cost data for two products, L and C:

Product L

Product C

Contribution margin per unit

$24

$25

Machine-hours needed per unit

6 hours

5 hours

The company can only perform 14,000 machine hours each period, due to limited skilled labor and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period?

rev: 01_23_2015_QC_CS-5061

$56,000

$56,300

$70,000

$84,000

Wright Company produces products I, J, and K from a single raw material input. Budgeted data for the next month is as follows:

Product I

Product J

Product K

Units produced

1,900

2,400

3,400

Per unit sales value at split-off

$14

$18

$19

Added processing costs per unit

$4

$6

$6

Per unit sales value if processed further

$23

$23

$28

If the cost of the raw material input is $82,000, which of the products should be processed beyond the split-off point?

Product I

Product J

Product K

A)

yes

yes

no

B)

yes

no

yes

C)

no

yes

no

D)

no

yes

yes

Option A

Option B

Option C

Option D

Coakley Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $58 to buy from farmers and $20 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $34 or processed further for $26 to make the end product industrial fiber that is sold for $46. The beet juice can be sold as is for $54 or processed further for $34 to make the end product refined sugar that is sold for $80. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?

rev: 08_07_2013_QC_33489

$(41)

$(60)

$(8)

$(12)

---

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Two products, IF and RI, emerge from a joint process. Product IF has been allocated $27,300 of the total joint costs of $48,000. A total of 2,200 units of product IF are produced from the joint process. Product IF can be sold at the split-off point for $11 per unit, or it can be processed further for an additional total cost of $10,200 and then sold for $13 per unit. If product IF is processed further and sold, what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly after the split-off point?

$33,900 less profit

$5,800 less profit

$18,400 more profit

$21,500 more profit

The management of Freshwater Corporation is considering dropping product C11B. Data from the company's accounting system appear below:

Sales

$937,000

Variable expenses

$412,500

Fixed manufacturing expenses

$351,000

Fixed selling and administrative expenses

$258,000

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $214,500 of the fixed manufacturing expenses and $125,500 of the fixed selling and administrative expenses are avoidable if product C11B is discontinued.

What would be the effect on the company's overall net operating income if product C11B were dropped?

Overall net operating income would decrease by $184,500.

Overall net operating income would increase by $84,500.

Overall net operating income would decrease by $84,500.

Overall net operating income would increase by $184,500.

Broze Company makes four products in a single facility. These products have the following unit product costs:

Products

A

B

C

D

Direct materials

$15.00

$10.90

$11.70

$11.30

Direct labor

20.10

28.10

34.30

41.10

Variable manufacturing overhead

5.00

3.40

3.30

3.90

Fixed manufacturing overhead

27.20

35.50

27.30

37.90

Unit product cost

$67.30

$77.90

$76.60

$94.20

Additional data concerning these products are listed below.

Products

A

B

C

D

Grinding minutes per unit

4.50

6.00

5.00

4.10

Selling price per unit

$76.80

$94.20

$88.10

$104.90

Variable selling cost per unit

$2.90

$1.90

$4.00

$2.30

Monthly demand in units

4,700

4,700

3,700

2,700

The grinding machines are potentially the constraint in the production facility. A total of 54,300 minutes are available per month on these machines.

Direct labor is a variable cost in this company.

How many minutes of grinding machine time would be required to satisfy demand for all four products?

18,600

57,770

78,920

54,300

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