Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a

Cruise Company produces a part that is used in the manufacture of one of its products. The unit manufacturing costs of this part, assuming a production level of 6,000 units, are as follows:

Direct materials

$4.00

Direct labour

$4.00

Variable manufacturing overhead

$3.00

Fixed manufacturing overhead

$5.00

Total cost

$16.00

The fixed overhead costs are avoidable.

  1. What does a favourable direct materials price variance indicate?
    1. The actual cost of materials purchased was greater than the standard cost of materials purchased.
    2. The standard cost of materials purchased was less than the actual cost of materials purchased.
    3. The standard cost of materials purchased was greater than the actual cost of materials purchased.
    4. The actual quantity of materials used was less than the standard quantity of materials used for actual production.

  1. In flexible budgets, costs that remain the same regardless of the output levels within the relevant range are
    1. allocated costs.
    2. budgeted costs.
    3. fixed costs.
    4. variable costs.
    5. estimated costs.

  1. Actual overhead is $698,000, while budgeted overhead is $598,000. What is the fixed overhead static-budget variance if 250,000 units are produced and 170,000 are budgeted?
    1. $80,000 favourable
    2. $80,000 unfavourable
    3. $100,000 favourable
    4. $102,000 unfavourable
    5. $100,000 unfavourable

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting In An Economic Context

Authors: Jamie Pratt

3rd Edition

0538855843, 978-0538855846

More Books

Students also viewed these Accounting questions