Use the following to answer questions 16-20: Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were $16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear below. Expected Sales January $10,000 February 24,000 March 16,000 April 25,000 The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred. 16. In a budgeted income statement for the month of February, net income would be: a. $9,000. b. $1,800. c. $0. d. $4,200. 17. In a budgeted balance sheet, the Merchandise Inventory on February 28 would be: a. $4,800. b. $7,500. c. $9,600. d. $3,200. 18. The Accounts Receivable balance that would appear in the March 31 budgeted balance sheet would be: a. $15,000. b. $16,000. c. $8,800. d. $12,400. 19. In a budget of cash receipts for March, the total cash receipts would be: a. $17,800. b. $8,200. c. $20,200. d. $16,000. 20. In a budget of cash disbursements for March, the total cash disbursements would be: a. $11,200. b. $13,900. c. $22,300. d. $16,900. 37. (Appendix) Drake Company purchased materials on account. The entry to record the purchase of materials having a standard cost of $1.50 per pound from a supplier at $1.60 per pound would include a: a. credit to Raw Materials Inventory. b. debit to Work in Process. c. credit to Materials Price Variance. 38. (Appendix) Which of the following entries would correctly record the charging of direct labor costs to Work in Process given an unfavorable labor efficiency variance and a favorable labor rate variance? a. Work in Process Labor Efficiency Variance Labor Rate Variance Wages Payable b. Work in Process Wages Payable c. Work in Process Labor Efficiency Variance Labor Rate Variance Wages Payable d. Work in Process Labor Rate Variance Labor Efficiency Variance Wages Payable 41. Dahl Company, a clothing manufacturer, uses a standard costing system. Each unit of a finished product contains 2 yards of cloth. However, there is unavoidable waste of 20%, calculated on input quantities, when the cloth is cut for assembly. The cost of the cloth is $3 per yard. The standard direct material cost for cloth per unit of finished product is: a. $4.80. b. $6.00. c. $7.00. d. $7.50. d. debit to Materials Price Variance. 42. Cox Company's direct material costs for the month of January were as follows: Actual quantity purchased 18,000 kilograms Actual unit purchase price $ 3.60 per kilogram Materials price variance-- unfavorable (based on purchases) $ 3,600 Standard quantity allowed for actual production 16,000 kilograms Actual quantity used 15,000 kilograms For January there was a favorable direct material quantity variance of: a. $3,360. b. $3,375. c. $3,400. d. $3,800. 43. The Porter Company has a standard cost system. In July the company purchased and used 22,500 pounds of direct material at an actual cost of $53,000; the materials quantity variance was $1,875 Unfavorable; and the standard quantity of materials allowed for July production was 21,750 pounds. The materials price variance for July was: a. $2,725 F. b. $2,725 U. c. $3,250 F. d. $3,250 U. 46. Yola Company manufactures a product with standards for direct labor of 4 direct labor-hours per unit at a cost of $12.00 per direct labor-hour. During June, 1,000 units were produced using 4,100 hours at $12.20 per hour. The direct labor efficiency variance was: a. $1,200 favorable. b. $1,200 unfavorable. c. $2,020 favorable. d. $2,020 unfavorable. 47. The following labor standards have been established for a particular product: Standard labor hours per unit of output 8.3 hours Standard labor rate $12.10 per hour The following data pertain to operations concerning the product for the last month: Actual hours worked 6,100 hours Actual total labor cost $71,370 Actual output 900 units What is the labor efficiency variance for the month? a. $19,017 F b. $19,017 U c. $16,029 F d. $16,577 F 48. Lab Corp. uses a standard cost system. Direct labor information for Product CER for the month of October follows: Standard direct labor rate $6.00 per hour Actual direct labor rate paid $6.10 per hour Standard hours allowed for actual production 1,500 hours Labor efficiency variance--unfavorable $600 What are the actual hours worked? a. 1,400. b. 1,402. c. 1,598. d. 1,600. 50. For the month of April, Thorp Co.'s records disclosed the following data relating to direct labor: Actual cost $10,000 Rate variance $ 1,000 favorable Efficiency variance $ 1,500 unfavorable For the month of April, actual direct labor hours amounted to 2,000. In April, Thorp's standard direct labor rate per hour was: a. $5.50. b. $5.00. c. $4.75. d. $4.50. 51. The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 7.8 hours Standard variable overhead rate $12.55 per hour The following data pertain to operations for the last month: Actual hours 2,900 hours Actual total variable overhead cost $36,975 Actual output 200 units What is the variable overhead efficiency variance for the month? a. $17,397 U b. $16,817 U c. $312 F d. $17,085 U 52. The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output 5.6 hours Standard variable overhead rate $12.00 per hour The following data pertain to operations for the last month: Actual hours 2,600 hours Actual total variable overhead cost $31,330 Actual output 400 units What is the variable overhead spending variance for the month? a. $112 F b. $130 U c. $4,450 U d. $4,338 U Use the following to answer questions 53-56: Appendix) The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip: Standard Quantity or Hours Standard Cost per Mip Direct materials 6 board feet $9.00 Direct labor 0.8 hours $9.60 There were no inventories of any kind on August 1. During August, the following events occurred: Purchased 15,000 board feet at the total cost of $24,000. Used 12,000 board feet to produce 2,100 Mips. Used 1,700 hours of direct labor time at a total cost of $20,060. 53. To record the purchase of direct materials, the general ledger would include what entry to the Materials Price Variance Account? a. $1,500 credit b. $1,500 debit c. $6,000 credit d. $6,000 debit 54. To record the use of direct materials in production, the general ledger would include what entry to the Materials Quantity Variance account? a. $3,600 debit b. $3,600 credit. c. $900 debit d. $900 credit 55. To record the incurrence of direct labor cost and its use in production, the general ledger would include what entry to the Labor Rate Variance account? a. $240 credit b. $240 debit c. $340 debit d. $340 credit 56. To record the incurrence of direct labor costs and its use in production, the general ledger would include what entry to the Labor Efficiency Variance account? a. $480 credit b. $240 debit c. $1,200 debit d. $1,200 credit 59. Overhead cost is applied to units based on direct labor hours. For April, total overhead cost was budgeted at $80,000 based on a denominator activity level of 20,000 direct labor hours for the month. The standard cost card indicates that each unit of finished product requires 2 direct labor-hours. The following data are available for April's activity: Number of units produced 9,500 Direct labor hours worked 19,500 Actual total overhead cost incurred $79,500 What amount of total overhead cost would have been applied to production for the month of April? a. $76,000. b. $78,000. c. $79,500. d. $80,000. 61. The Adlake Company makes and sells a single product and uses a standard cost system. During October, the company budgeted $300,000 in manufacturing overhead cost at a denominator activity of 20,000 machine-hours. At standard, each unit of finished product requires 5 machine-hours. The following cost and activity were recorded during October: Total actual manufacturing overhead cost incurred $294,000 Units of product completed 3,800 Actual machine-hours worked 19,422 The amount of overhead cost that the company applied to work in process for October was: a. $279,300. b. $291,330. c. $294,000. d. $285,000. 62. Union Company uses a standard cost accounting system. The following overhead costs and production data are available for August: Standard fixed overhead rate $1.00 per hour Standard variable overhead rate $4.00 per hour Denominator activity 40,000 hours Actual hours 39,500 hours Standard hours allowed for output 39,000 hours Overapplied overhead $2,000 The total amount of overhead applied to work in process for August would be: a. $195,000. b. $197,000. c. $197,500. d. $199,500. Use the following to answer questions 67-70: The Clark Company makes a single product and uses standard costing. Some data concerning this product for the month of May follow: Labor rate variance: $ 7,000 F Labor efficiency variance: $12,000 F Variable overhead efficiency variance: $ 4,000 F Number of units produced: 10,000 Standard labor rate per direct labor hour: $ 12 Standard variable overhead rate per direct labor hour: $ 4 Actual labor hours used: 14,000 Actual variable manufacturing overhead costs: $58,290 67. The standard hours allowed to make one unit of finished product are: a. 1.0. b. 1.2. c. 1.5. d. 2.0. 68. The total standard cost for variable overhead for May was: a. $56,000. b. $40,000. c. $60,000. d. $50,000. 69. The total standard cost for direct labor for May was: a. $168,000. b. $180,000. c. $120,000. d. $161,000. 70. The actual direct labor rate for May in dollars per hour was: a. $12.50. b. $12.00. c. $11.75. d. $11.50