Question

QUESTION 21

1. Which of these factors is the most likely cause for a favorable direct materials price variance?

   		The purchasing agent was highly effective in negotiating a lower price
   		Producing at 50% of capacity instead of 60%
   		Higher quality materials were purchased than required
   		New production techniques led to more efficient use of materials

2 points   

QUESTION 22

1. Jane's Juices, which makes smoothies on university campuses across Michigan, is making an annual budget for this coming financial year. Last year, 26,000 units were sold, and sales are expected to increase 20% next year, and the sales price is expected to remain at $8 each. Finished goods inventory at the end of the year was 1125 units, and management likes to have enough inventory at the end of the year for 2% of next year's sales. What is the sales budget (in dollars) for next year?

   		$260,400
   		$208,000
   		$238,800
   		$249,600

2 points   

QUESTION 23

1. At Jamal's Juices, each smoothie requires 16 oz of juice, which costs $0.15/oz. It takes 0.10 hrs of direct labor to make smoothies, at $9.35 per DLH. Variable overhead costs $1.25/smoothie, and fixed costs total $98,000 per year. They expect to produce 102,000 smoothies next year.

   Calculate the manufacturing overhead budget for next year.

   		$117,300
   		$95,370
   		$225,500
   		$408,000

2 points   

QUESTION 24

1. Dex, Inc. installs pre-built decks on mobile homes. The expect to make 300 decks next year, where each deck requires 500 ft of lumber, at $1.75 per foot.

   Calculate the standard cost of direct materials (per deck).

   		$262,500
   		$875
   		$525
   		$1,400

2 points   

QUESTION 25

1. Dreidell Corporation expected to use 1.1 direct labor hours to produce one unit of their product, at a rate of $12/DLH. Actual results for last year indicate that they sold 420,000 units, where their direct labor workforce actually worked 500,000 hours at a rate of $13.25/DLH. What is the Direct Labor Rate Variance?

   		$503,500 unfavorable
   		$625,000 unfavorable
   		$577,500 favorable
   		$ 503,500favorable

2 points   

QUESTION 26

1. Copper Burgers sells burgers with 0.5 lb meat on each burger. They expected to buy meat at $2.30/lb, but actually ended up paying $3.35/lb. They made 100 burgers this week, and actually used 55 lbs of meat. Calculate the Direct Materials Quantity Variance.

   		$11.50 unfavorable
   		$69.25 unfavorable
   		$16.75 favorable
   		$150.75 favorable

Answer 1

Solution 21:

The purchasing agent was highly effective in negotiating a lower price most likely cause for a favorable direct materials price variance.

Hence first option is correct.

Solution 22:

Sale budget (In dollars) = Budgeted sales units* selling price per unit = (26000*120%) * $8 = $249,600

Hence last option is correct.

Solution 23:

Manufacturing overhead budget = Budgeted variable overhead + Budgeted fixed overhead

= (102000*$1.25) + $98,000 = $225,500

Hence 3rd option is correct.

Solution 24:

Standard cost of direct material per deck = Lumber per deck * cost per ft of lumber

= 500 * $1.75 = $875

Hence 2nd option is correct.

Solution 25:

Direct labor rate variance = (SR - AR)* AH = ($12 - $13.25) * 500000 = $625,000 Unfavorable

Hence 2nd option is correct.

Solution 26:

Direct material quantity variance = (SQ - AQ) * SP = (100*0.5 - 55) * $2.30 = $11.50 Unfavorable

Hence first option is correct.