Multiple choice Questions 44 The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100 capacity of 30,000 direct labor hours The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows Standard 25,000 hours at $10 $250,000 Actual Variable factory overhead 202,500 Fixed factory overhead 60,000 What is the amount of the factory overhead controllable variance a $10,000 favorable b $2,500 unfavorable c $10,000 unfavorable d $2,500 favorable 45 A disadvantage of static budgets is that they a start with a clean slate b cannot be used by service companies c do not show possible changes in underlying activity levels d show the expected results of a responsibility center for several levels of activity 46 Which of the following conditions normally would not indicate that standard costs should be revised a The engineering department has revised product specifications in responding to customer suggestions b The company has signed a new union contract which increases the factory wages on average by $2 00 an hour c Actual costs differed from standard costs for the preceding week d The world price of raw materials increased 47 The following data relate to direct labor costs for the current period Standard costs 9,000 hours at $5 50 Actual costs 8,750 hours at $5 75 What is the direct labor rate variance a $2,250 00 unfavorable b $2,187 50 unfavorable c $1,438 00 favorable d $1,375 00 favorable 48 If the expected sales volume for the current period is 7,000 units, the desired ending inventory is 200 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is a 7,000 b 6,900 c 7,100 d 7,200 49 If fixed costs are $1,400,000, the unit selling price is $220, and the unit variable costs are $120, what is the amount of sales required to realize an operating income of $200,000 a 14,000 units b 12,000 units c 16,000 units d 13,333 units 50 What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide a profit a Margin of safety ratio b Contribution margin ratio c Costs and expenses ratio d Profit ratio

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Multiple choice Questions ____ 44. The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed

Multiple choice Questions

____ 44. The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory overhead for the production of 5,000 units during May were as follows:

Standard:	25,000 hours at $10	$250,000
Actual:	Variable factory overhead	202,500
	Fixed factory overhead	60,000

What is the amount of the factory overhead controllable variance?

a.	$10,000 favorable
b.	$2,500 unfavorable
c.	$10,000 unfavorable
d.	$2,500 favorable

____ 45. A disadvantage of static budgets is that they:

a.	start with a clean slate
b.	cannot be used by service companies
c.	do not show possible changes in underlying activity levels
d.	show the expected results of a responsibility center for several levels of activity

____ 46. Which of the following conditions normally would not indicate that standard costs should be revised?

a.	The engineering department has revised product specifications in responding to customer suggestions.
b.	The company has signed a new union contract which increases the factory wages on average by $2.00 an hour.
c.	Actual costs differed from standard costs for the preceding week.
d.	The world price of raw materials increased.

____ 47. The following data relate to direct labor costs for the current period:

Standard costs	9,000 hours at $5.50
Actual costs	8,750 hours at $5.75

What is the direct labor rate variance?

a.	$2,250.00 unfavorable
b.	$2,187.50 unfavorable
c.	$1,438.00 favorable
d.	$1,375.00 favorable

____ 48. If the expected sales volume for the current period is 7,000 units, the desired ending inventory is 200 units, and the beginning inventory is 300 units, the number of units set forth in the production budget, representing total production for the current period, is:

a.	7,000
b.	6,900
c.	7,100
d.	7,200

____ 49. If fixed costs are $1,400,000, the unit selling price is $220, and the unit variable costs are $120, what is the amount of sales required to realize an operating income of $200,000?