Herbal Co$.$ produces and sells natural shampoo in plastic bottles. Every bottle contains $1$ litre of shampoo. The following tables show information of the firm$$s balance sheet on January $1$st$,20$X$9,$ and the budgeting information of $20$X$9.$ Missing data are assumed to be zero.

Balance Sheet on January $1$st$,20$X$9$

Concept Description Amount in $$

Factory building Unit$-$of$-$production depreciation, life$-$time production: $2,000,000$ litres of shampoo $1,520,000$

Machinery Straight$-$line depreciation, useful life$-$time: $10$ years $60,000$

Finished goods $5,000$ bottles of shampoo @ $20/$bottle$,$ FIFO is used. $100,000$

Account receivable $-2,000$

Cash $-21,000$

Total assets $1,703,000$

Contributed capital $-900,000$

Bank loan Equal payment over $10$ years, annual interest rate: $6\%800,000$

Account payable $-3,000$

Total Liabilities and Equities $1,703,000$

Budgeting information of $20$X$9$

No$.$ of bottles to be produced $100,000$

No$.$ of bottles to be sold $80,000$

Purchase of direct materials $800,000$

Purchase of plastic bottles $(100,000$ bottles @ $1/$bottle$)100,000$

Factory utility costs $4/$litre produced

Salary paid to factory workers $($fixed contracts$)270,000$

Selling and administration costs $($variable cost$)66,000$

Customer service costs $($fixed cost$)35,000$

Ending balance of direct materials $90,000$

Account receivable $($ending balance $20$X$9)226,000$

Account payable $($ending balance $20$X$9)53,000$

All the other costs are paid in cash $-$

Market selling price $28$

Shareholders$$ required rate of return $40\%$

Income tax $25\%$

Based on the information presented above answer the following Questions:

$1.$ Using the direct costing method, what is the budgeted costs of goods manufactured $($COGM$)?$

a$.817,600$

b$.1,286,000$

c$.1,862,000$

d$.2,150,000$

$2.$ Using the direct costing method, the budgeted ending balance of finished goods is:

a$.286,160$

b$.321,500$

c$.387,000$

d$.512,050$

$3.$ Using the full cost as a cost basis and direct costing method for income statement, the minimum selling price to obtain the required rate of return $(40\%)$ is:

a$.24\mathrm{.}62$

b$.23\mathrm{.}38$

c$.13\mathrm{.}19$

d$.15\mathrm{.}70$

$4.$ Using the direct costing method, the budgeted net income of $20$X$9$ is:

a$.2,694,000$

b$.602,670$

c$.1,743,788$

d$.562,875$

$5.$ Using the direct costing method, the cash balance of the budgeted balance sheet on December $31,20$X$9$ is:

a$.1,990,000$

b$.1,019,738$

c$.100,375$

d$.134,110$

At the end of year $20$X$9,$ Herbal Co$.$ reports information about the actual operation activities of the year. All the other information remains the same as in the budgets.

Actual information of $20$X$9$

No$.$ of units produced $80,000$

No$.$ of units sold $70,000$

Sales revenue $1,750,000$

Direct materials, used $570,000$

Plastic bottles, used $80,000$

Salary paid to factory workers $($fixed contracts$)270,000$

Factory utility costs $5/$litre produced

Selling and administration costs $($variable cost$)72,000$

Customer service costs $($fixed cost$)30,000$

$6.$ Based on the actual information of $20$X$9,$ what is the depreciation cost of factory building included in the cost of goods manufactured?

a$.121,600$

b$.167,200$

c$.6,080$

d$.60,800$

$7.$ What is the static$-$budget$-$variance $($level $1)$ of cost of goods sold using direct costing?

a$.61,975($favorable$)$

b$.162,863($favorable$)$

c$.62,605($unfavorable$)$

d$.60,427($unfavorable$)$

$8.$ What is the sales$-$volume$-$budget $($level $2)$ of selling and administration costs using direct costing?

a$.47,429($favorable$)$

b$.8,250($favorable$)$

c$.3,143($favorable$)$

d$.13,200($favorable$)$

$9.$ Based on the actual information of $20$X$9,$ what is the allocated fixed manufacturing costs included in the cost of goods manufactured, if absorption costing is used?

a$.220,800$

b$.160,200$

c$.251,000$

d$.220,880$