1. Gin Products, Inc. manufactures garlic gravy. Gin's production budget indicated the following units (jars) of gravy to be produced for the upcoming months:

   	April	May	June
   Unites to be produced	55,000	65,000	80,000

   Six grams of garlic are needed for every jar of gravy. Gin also likes to have enough garlic on hand at the end of the month to cover 10% of the next month's production requirements for garlic. How many grams of garlic should Gin plan on purchasing during the month of May?

   	A.	399,000 grams
   	B.	412,000 grams
   	C.	432,000 grams
   	D.	336,000 grams

2. Lee Company's standards for the most recent period are given below. Fixed and variable manufacturing overhead costs are applied to products on the basis of machine hours. The denominator volume of machine hours is 9,000.

   	Standard Quantity or Hours per unit	Standard Price or Rate per unit	Standard Cost per unit
   Direct Materials	3 feet	$6 per foot	$18
   Direct Labor	1.5 direct labor hours	$10 per direct labor hour	$15
   Variable Overhead	2 machine hours	$12 per machine hour	$24
   Fixed Overhead	2 machine hours	$15 per machine hour	$30

   Actual costs for the most recent period, during which 5,000 units of output were actually produced and used 9,600 machine hours, are given below:

   Direct Materials	The firm purchased 16,000 feet at $6.30 per foot, but only used 14,500 feet in production.
   Direct Labor	The firm used 7,150 direct labor hours and paid $11 per direct labor hour.
   Variable Overhead	Actual variable overhead costs were $122,880.
   Fixed Overhead	Actual fixed overhead costs were $142,000.

   What was the companys material quantity variance?

   	A.	$3,150 favorable
   	B.	$3,150 unfavorable
   	C.	$3,000 favorable
   	D.	$3,000 unfavorable

3. Which of the following is FALSE about flexible budgets?

   	A.	Unlike flexible budgets, planning budgets are only valid for the planned level of activity.
   	B.	Flexible budgets are prepared at the beginning of an accounting period before the actual production starts.
   	C.	Flexible budgets allow managers to differentiate activity variances from spending variances for revenues and expenses.
   	D.	Flexible budgets may be prepared for any activity level in the relevant range.

4. A&B Co. provides house cleaning services. The company uses the number of jobs to measure activity. At the beginning of April, the company budgeted for 80 jobs, but the actual number of jobs turned out to be 90. A report comparing the budgeted revenues and costs to the actual revenues and costs appears below:

   A&B Co.
   For the Month Ended April 30
   		Revenue/Cost Formulas	Actual Results	Planning Budget
   Number of jobs (Q)			90	80
   Revenue		$100Q	8,900	8,000
   Expenses:
   	Variable expenses	?	3,800	3,200
   	Fixed expense	?	2,100	2,500
   Total expenses			5,900	5,700
   Net operating income			3,000	2,300

   What is the amount of activity variance for revenue in A&Bs performance report for April?

   	A.	$900 favorable
   	B.	$900 unfavorable
   	C.	$1,000 favorable
   	D.	$1,000 unfavorable