Question

1. Haywood Company has fixed costs of $30,000 per month. Highest production volume during the year was in January when 110,000 units were produced, 90,000 units were sold, and total costs of $650,000 were incurred. In June, the company produced only 60,000 units. What was the total cost incurred in June?

a	$537,600
b	$433,333
c	$650,000
d	$368,400

5. Fedor, Inc. has prepared the following direct materials purchases budget:

Month	Budgeted DM Purchases
June	$67,000
July	77,000
August	76,300
September	78,000
October	70,200

All purchases are paid for as follows: 40% in the month of purchase, 50% in the following month, and 10% two months after purchase. Calculate total budgeted cash payments made in October for purchases.

a	$46,630
b	$67,080
c	$74,710
d	$35,710

6. Infinity Clock Company prepared the following static budget for the year:

Static Budget
Units/Volume		5000
	Per Unit
Sales Revenue	$7.00	$35,000
Variable Costs	1.00	5000
Contribution Margin		30,000
Fixed Costs		3000
Operating Income/(Loss)		$27,000

If a flexible budget is prepared at a volume of 7800 units, calculate the amount of operating income. The production level is within the relevant range.

a	$7800
b	$27,000
c	$43,800
d	$3000

16. Pearl, Inc. has prepared the operating budget for the first quarter of the year. The company forecast sales of $45,000 in January, $55,000 in February, and $65,000 in March. Variable and fixed selling and administrative expenses are as follows:

Variable Expenses:

Power cost (20% of sales)

Miscellaneous expenses: (10% of sales)

Fixed Expenses:

Salaries expense: $6000 per month

Rent expense: $5000 per month

Depreciation expense: $1400 per month

Power cost/fixed portion: $600 per month

Miscellaneous expenses/fixed portion: $1200 per month

Calculate total budgeted selling and administrative expenses for the month of January.

a	$13,500
b	$27,700
c	$33,700
d	$30,700

Answer 1