In: Accounting
Part A. Motorcycle Manufacturers, Inc. projected sales of 57,500 machines for the year. The estimated January 1 inventory is 6,950 units, and the desired December 31 inventory is 7,350 units. What is the budgeted production (in units) for the year?
a.57,500 b.57,900 c.57,100 d.43,200
PART B. Motorcycle Manufacturers, Inc. has the following data related to direct materials costs for November: actual costs for 4,600 pounds of material, $5.20; and standard costs for 4,450 pounds of material at $6.20 per pound.
What is the direct materials price variance?
a.$4,600 unfavorable b.$930 unfavorable c.$930 favorable d.$4,600 favorable
PART C .Motorcycle Manufacturers, Inc. sells a single product.
Budgeted sales for the year are anticipated to be 647,000 units,
estimated beginning inventory is 108,000 units, and desired ending
inventory is 82,000 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 @ $0.64 per pound
Material B 1.00 lb. per unit @ $2.31 per pound
Material C 1.20 lb. per unit @ $1.16 per pound
The dollar amount of material A used in production during the year
is
a.$207,040 b.$198,720 c.$1,434,510 d.$864,432
PART D. Motorcycle Manufacturers, Inc. uses the total cost concept of product pricing. Below is the cost information for the production and sale of 55,800 units of its sole product. Magpie desires a profit equal to a 23% rate of return on invested assets of $610,000.
Fixed factory overhead cost | $39,500 |
Fixed selling and administrative costs | 7,400 |
Variable direct materials cost per unit | 4.78 |
Variable direct labor cost per unit | 1.88 |
Variable factory overhead cost per unit | 1.13 |
Variable selling and administrative cost per unit | 4.50 |
The markup percentage on total cost for the company's product is
a.19.1% b.15.3% c.32.6% d.24.9%
Part-A: | ||||||
Answer is b. 57900 units | ||||||
Explanation: | ||||||
Budgeted sales | 57500 | |||||
Add: Ddesired ending inventory | 7350 | |||||
Less: Desired beginning Inventory | -6950 | |||||
Budgeted production | 57900 | |||||
Part-B: | ||||||
Answer is d. $ 4600 favorable | ||||||
Explanation: | ||||||
Material price variance: Actiual qty (Std price-Actual price) | ||||||
4600 (6.20-5.20) = $ 4600 Favorable | ||||||
Part C: | ||||||
Answer is b. $ 198,720 | ||||||
Explanation: | ||||||
Production units: | ||||||
Sales units | 647000 | |||||
Add: ending inventory | 82000 | |||||
Less: Beginning inventory | 108000 | |||||
Production units: | 621000 | |||||
Cost per unit of Material A (0.50 [email protected] per lbs) | 0.32 | |||||
Total material ccost of A in $ | 198720 | |||||
Part D: | ||||||
Answer is a. 19.10% | ||||||
Explanation: | ||||||
Total Cost: | ||||||
Maetrial (55800*4.78) | 266724 | |||||
labour (55800*1.88) | 104904 | |||||
Variable Mfg oh (55800*1.13) | 63054 | |||||
Variable Selling oh (55800*4.50) | 251100 | |||||
Fixed mfg oh | 39500 | |||||
Fixed Selling and admin OH | 7400 | |||||
Total Cost: | 732682 | |||||
Desired return (610,000*23%) | 140300 | |||||
Mark up on total cost | 19.15% | |||||