Question

12. Danny Electronics Corporation uses a standard cost system for the production of its water ski radios. The direct labor standard for each radio is 0.9 hours. The standard direct labor cost per hour is $7.20. During the month of August, Danny's water ski radio production used 6,600 direct labor-hours at a total direct labor cost of $48,708. What is Danny's labor rate variance for August?

    1. $1,188Favorable

    2. $1,188 Unfavorable

    3. $2,160 Favorable

    4. $2,160Unfavorable

13. Emily Corporation's cost of goods manufactured for the just completed month was $146,000. The beginning finished goods inventory was $35,000 and the ending finished goods inventory was $37,000. How much was the cost of goods sold?

    A. $181,000B. $146,000C. $144,000D. $139,000

14. If manufacturing overhead is under applied, then:

    1. actual manufacturing overhead cost is less than estimated manufacturing overhead cost.

    2. the amount of manufacturing overhead cost applied to Work in Process is less than the actual

       manufacturing overhead cost incurred.

    3. the predetermined overhead rate is too high.

    4. the Manufacturing Overhead account will have a credit balance at the end of the year.

15. Selling used equipment, for cash, at book value will:

    1. Increaseworkingcapital

    2. Decrease working capital

    3. Decrease debt-to-equity ratio

    4. Increasenetincome

16. A company’s current ratio is greater than 1.0. Purchasing raw materials for cash will:

    1. Notchangethecurrentratio

    2. Increase the current ratio

    3. Decrease the current ratio

    4. Increasenetworkingcapital

17. A company’s DSO (Days Sales Outstanding) would expect to improve as a result of

    1. The terms of sale changed from net 30 to net 45 days from invoice date

    2. A drop is sales price

    3. An increase in cash sales in proportion to credit sales

D. A change in the credit policy to shorten the period for cash discounts

Answer 1

Answer-1-

$1,188 Unfavorable

Explanation:

Given that labor hours for each radio = 0.9

Standard labor cost per hour = $7.20

Actual labor cost = $48,708

Actual labor hours = 6,600

Actual labor rate = $48,708/6,600 = $7.38

Labor Rate Variance = (Standard Rate - Actual Rate) * Actual Hours

= ($7.20 - $7.38) * 6600 = $1,188 Unfavourable

Hence, the correct option is b- $1,188 unfavorable

2-

Schedule of cost of goods sold

Beginning finished goods inventory	35,000
Add: Cost of goods manufactured	146,000
Cost of goods available for sale	181,000
Less: Ending finished goods inventory	- 37,000
Unadjusted cost of goods sold	144,000

Hence, the correct option is c-$144,000

3-If manufacturing overhead is under applied, then:

the amount of manufacturing overhead cost applied to Work in Process is less than the actual

manufacturing overhead cost incurred.

Hence the correct option is b

4-

Selling used equipment at book value for cash will increase the cash inflow and reduce the asset. The will be no profit/ loss on sale of such asset since it is sold at book value. There will be no effect on debt or equity of the company.

Increase in the cash balance will increase the current assets and thus will increase the Working Capital.

hence, the correct option is -a increase working capital

5-

A company’s current ratio is greater than 1.0. Purchasing raw materials for cash will:

1. Not change the current ratio

Hence the correct option is 1

6-The correct option is-An increase in cash sales in proportion to credit sales.