Question

49. The Arkansas Company makes and sells a product called Product K. Each unit of Product K sells for $25 dollars and has a unit variable cost of $19. The company has budgeted the following data for November:

• Sales of $1,162,200, all in cash.
• A cash balance on November 1 of $49,100.
• Cash disbursements (other than interest) during November of $1,170,000.
• A minimum cash balance on November 30 of $62,000.

If necessary, the company will borrow cash from a bank. The borrowing will be in multiples of $1,000 and will bear interest at 3% per month. All borrowing will take place at the beginning of the month. The November interest will be paid in cash during November.
The amount of cash needed to be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance is:

$21,000.

$39,000.

$40,000.

$22,000.

50. The following information summarizes the standard cost for producing one metal tennis racket frame at Spaulding Industries. In addition, the variances for one month's production are given. Assume that all inventory accounts have zero balances at the beginning of the month.

	Standard Cost Per Unit				Standard Monthly Costs
Materials	$	4.00			$	8,900
Direct Labor 2 hrs. @ $2.60		5.20				12,480
Factory Overhead:
Variable		2.00				4,800
Fixed		5.50				13,200
	$	16.70			$	39,380

Variances:
Material price	384.00		unfavorable
Material quantity	700.00		unfavorable
Labor rate	650.00		favorable
Labor efficiency	2,340.00		unfavorable

What were the actual direct labor hours worked during the month?

4,550.

5,450.

5,700.

4,800.

51. Given the following information for Camping Division:

Selling price to outside customers	$	40
Variable cost per unit	$	28
Total fixed costs	$	666,000
Capacity in units		37,000

The Lantern Division would like to purchase internally from the Camping Division. The Lantern Division now purchases 6,400 units each period from outside suppliers at $38 per unit. The Camping Division has ample excess capacity to handle all of the Lantern Division's needs. What is the lowest price that Camping Division could accept?

$46.

$28.

$40.

$38.

Answer 1

49
	$21,000
	Cash balance, beginning	$49,100
	Add cash receipts as all sales are for cash	$1,162,200
	Total cash available	$1,211,300
	Less cash disbursements	-$1,170,000
	Excess (deficiency) of cash available over disbursements	$41,300
	Financing	$20,700
	Cash balance, ending	$62,000
	Because All borrowing will take place in multiples of $1,000
50	5,700
	Number of units = $12,480/$5.20 = 2,400
	[AH - (2,400 x 2)] x $2.60 = $2,340 U
	Actual hour = 5,700
51	$28
	The minimum transfer price is the variable costs of the selling division when the selling division has excess capacity