Question

1a. the following materials standards have been established for a particular product:

Standard quantity per unit of output    4.4 pounds
Standard price                                                      $13.20

The following data pertain to operations concerning the product for the last month:

Actual materials purchased                   4,800 pounds
Actual cost of materials                           $62,880
Actual materials used in production 4,300 pounds
Actual output                                                     700 units

What is the materials quantity variance for the month?

a.$6,550 U

b.$15,982 U

c.$6,600 U

d.$16,104 U

1b.The usual starting point for a master budget is:

a.the direct materials purchase budget.

b.the budgeted income statement.

c.the sales forecast or sales budget.

d.the production budget.

1c.There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?

a.It details the required direct labor hours.

b.It details the required raw materials purchases.

c.It summarizes the costs of producing units for the budget period.

d.It is calculated based on the sales budget and the desired ending inventory.

1d.When a decision is made among a number of alternatives, the benefit that is lost by choosing one alternative over another is the:

a.sunk cost

b.unavoidable cost

c.opportunity cost

d.detrimental cost

1e.A corporation makes 70,000 units per year of a part it uses in the products it manufactures. The unit product cost of this part is computed as follows:

Direct materials    $17.80
Direct labor                 19.00
Variable MO                   1.00
Fixed MO                       17.10
Unit product cost     54.90

An outside supplier has offered to sell the company all of these parts it needs for $48.50 a unit. If the company accepts this offer, the facilities now being used to make the part could be used to make more units of a product that is in high demand. The additional contribution margin on this other product would be $273,000 per year.

Of the fixed manufacturing overhead cost being applied to the part, $8.20 would continue even if the part were purchased from the outside supplier.

How much of the unit product cost of $54.90 is relevant in the decision of whether to make or buy the part?

a.$37.80 per unit

b.$19.00 per unit

c.$54.90 per unit

d.$46.70 per unit

1f.A cost incurred in the past that is not relevant to any current decision is classified as a(n):

a.period cost.

b.opportunity cost.

c.differential cost.

d.sunk cost.

Answer 1