Question 41

Scranton Companys direct materials budget shows total cost of direct materials purchases for April, May and June to be $200,000, $240,000 and $280,000, respectively. Cash payments are 60% in the month of the purchase and 40% in the following month. The budgeted cash payments for May are

Select one:

a. $224,000.

b. $240,000.

c. $264,000.

d. $216,000.

Question 42

Which of the following budgets would be appropriate for a merchandising company?

Select one:

a. Merchandise purchases budget.

b. Direct materials budget

c. Factory overhead budget.

d. Direct labor budget.

Question 43

Assume the following information for production in April:

	Actual	Standard
Direct materials price (per yard)	$1.65	$1.80
Direct materials purchased & used (yards)	21,400	21,000

What is the materials price variance for production in April?

Select one:

a. $3,210 Favorable

b. $720 Unfavorable

c. $2,490 Favorable

d. $3,150 Favorable

Question 44

The standard labor cost is $20 ($10 per direct labor hour for 2 hours) per unit of finished goods. If the actual direct labor payroll was $39,200 for 4,000 direct labor hours worked and 1,900 units of finished goods completed, the direct labor hour variance is

Select one:

a. $2,000 Unfavorable

b. $800 Unfavorable

c. $1,200 Unfavorable

d. $2,800 Unfavorable

Question 45

The investigation of the materials price variance usually begins in the:

Select one:

a. Purchasing department.

b. First production department.

c. Accounts Payable department.

d. Sales department.

Question 46

Which of the following would NOT be consistent with the purchase of less expensive, sub-standard raw materials?

Select one:

a. A favorable materials quantity variance.

b. A favorable materials price variance.

c. An unfavorable labor usage variance.

d. An unfavorable total materials variance.

Question 47

Responsibility accounting reports for a profit center typically show

Select one:

a. Revenues, expenses, and profit controlled by the manager of the center.

b. Only the controllable revenues.

c. Revenues, expenses, profit and investment in assets controlled by the manager of the center.

d. All revenues and expenses of the profit center.

Question 48

Which one of the following will NOT increase return on investment?

Select one:

a. Operating assets are increased.

b. Fixed costs are decreased.

c. Variable costs are decreased.

d. Dollar sales are increased.

Question 49

Which of the following is true regarding responsibility accounting?

Select one:

a. Reports use information that begins at the lowest level of responsibility and moves upward.

b. Fewer costs are controllable as one moves up the levels of management responsibility.

c. It is not appropriate for not-for-profit entities.

d. It is more important for centralized entities versus decentralized entities.

Question 50

Given:

	Net revenue	$400,000
	Average operating assets	$120,000
	Controllable margin	$30,000
	Minimum rate of return	14%

The residual income for management performance evaluation is

Select one:

a. $13,200.

b. -$26,000.

c. $4,200.

d. $16,800