Question

1. A business operated at 100% of capacity during its first month and incurred the following costs:

Production costs (17,100 units):
Direct materials	$171,800
Direct labor	237,200
Variable factory overhead	264,600
Fixed factory overhead	97,600	$771,200
Operating expenses:
Variable operating expenses	$127,300
Fixed operating expenses	40,600	167,900

If 1,800 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

a.$84,305

b.$81,179

c.$98,853

d.$70,902

2. A business operated at 100% of capacity during its first month, with the following results:

Sales (112 units)		$560,000
Production costs (140 units):
Direct materials	$70,000
Direct labor	17,500
Variable factory overhead	31,500
Fixed factory overhead	28,000	147,000
Operating expenses:
Variable operating expenses	$6,470
Fixed operating expenses	3,430	9,900

What is the amount of the income from operations that would be reported on the variable costing income statement?

a.$458,330

b.$559,860

c.$550,100

d.$426,900

3. A business operated at 100% of capacity during its first month, with the following results:

Sales (102 units)		$530,400
Production costs (128 units):
Direct materials	$71,951
Direct labor	18,371
Variable factory overhead	32,148
Fixed factory overhead	30,618	153,088
Operating expenses:
Variable operating expenses	$5,999
Fixed operating expenses	4,342	10,341

What is the amount of the income from operations that would be reported on the absorption costing income statement?

a.$398,067

b.$530,272

c.$426,808

d.$422,466

4. If variable manufacturing costs are $10 per unit and total fixed manufacturing costs are $410,400, what is the manufacturing cost per unit if

a. 5,700 units are manufactured and the company uses the variable costing concept?
$

b. 7,200 units are manufactured and the company uses the variable costing concept?
$

c. 5,700 units are manufactured and the company uses the absorption costing concept?
$

d. 7,200 units are manufactured and the company used the absorption costing concept?
$

5. The following data are for Trendy Fashion Apparel:

	North	South
Sales volume (units):
Blouses	5,252	4,301
Skirts	3,007	8,124
Sales price per unit:
Blouses	$23	$19
Skirts	$18	$17
Variable cost per unit
Blouses	$6	$6
Skirts	$11	$11

a. Determine the contribution margin for Skirts.
$

b. Determine the contribution margin for the South Region.
$

6. Below is budgeted production and sales information for Flushing Company for the month of December:

	Product XXX	Product ZZZ
Estimated beginning inventory	31,000 units	19,000 units
Desired ending inventory	36,600 units	14,800 units
Region I, anticipated sales	311,000 units	264,000 units
Region II, anticipated sales	200,000 units	140,000 units

The unit selling price for product XXX is $5 and for product ZZZ is $13.

Budgeted sales for the month are

a.$4,575,000

b.$7,807,000

c.$11,895,000

d.$8,663,000

7. For February, sales revenue is $619,000; sales commissions are 6% of sales; the sales manager's salary is $89,500; advertising expenses are $87,500; shipping expenses total 2% of sales; and miscellaneous selling expenses are $2,300 plus 1/2 of 1% of sales. Total selling expenses for the month of February are

a.$231,915

b.$216,440

c.$179,300

d.$228,820

8. Stephanie Corporation sells a single product. Budgeted sales for the year are anticipated to be 700,000 units, estimated beginning inventory is 104,000 units, and desired ending inventory is 88,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.

Material A 0.50 lb. per unit @ $0.59 per pound
Material B 1.00 lb. per unit @ $1.54 per pound
Material C 1.20 lb. per unit @ $1.13 per pound

The dollar amount of material A used in production during the year is

a.$206,500

b.$201,780

c.$1,053,360

d.$927,504

9. Consider Derek's budget information: materials to be used totals $64,600; direct labor totals $201,700; factory overhead totals $397,900; work in process inventory January 1, $186,200; and work in progress inventory on December 31, $195,100. What is the budgeted cost of goods manufactured for the year?

a.$850,400

b.$664,200

c.$195,100

d.$655,300

10. Big Wheel, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. Sales on account are budgeted to be $15,800 for March and $73,900 for April. What are the budgeted cash receipts from sales on account for April?
$

11. Dove Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business are $250,000, $309,000, and $400,000, respectively, for September, October, and November. The company expects to sell 25% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month of the sale and 30% in the month following the sale.

The cash collections in November are

a.$210,000

b.$379,525

c.$455,430

d.$100,000

Answer 1

1.

Direct Material	10.05
Direct Labor	13.87
Variable Factory Overhead	15.47
Total Cost	39.39
Qty	1,800.00
Amount of Inventory	70,902.00

2.

Sales	560,000.00
Direct Materials	56,000.00
Direct Labor	14,000.00
Variable Factory Overhead	25,200.00
Variable Operating Expense	6,470.00
Income from Operations	458,330.00

3.

Sales	530,400.00
Direct Materials	57,335.95
Direct Labor	14,639.39
Variable Factory Overhead	25,617.94
Fixed Factory overhead	24,398.72
Fixed Operating Expense	4,342.00
Variable Operating Expense	5,999.00
Income from Operations	398,067.00

4.

a.10

b. 10

c. 10 + 410,400/5,700

=82

d. 10 + 410,400/7,200

=67

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