Accounting:Variance analysis,break-even estimation etc

1. Budgeted overhead for Harrington Company at normal
capacity of 30,000 direct labor hours is $4.50 per hour variable and $3 per
hour fixed. In May, $232,500 of overhead was incurred in working 31,500 hours
when 32,000 standard hours were allowed. The overhead controllable variance is

$3,750 F

$1,500 F

$7,500 F

$7,500 U

2. Vektek, Inc. thinks machine hours is the best activity
base for its manufacturing overhead. The estimate of annual overhead costs for
its jobs was $615,000. The company used 1,000 hours of processing on Job No.
B12 during the period and incurred overhead costs totaling $630,000. The
budgeted machine hours for the year totaled 20,000. How much overhead should be
applied to Job No. B12?

$630

$30,750

$31,500

$615

3. A company desires to sell a sufficient quantity of
products to earn a profit of $180,000. If the unit sales price is $20, unit
variable cost is $12, and total fixed costs are $360,000, how many units must
be sold to earn net income of $180,000?

101,250 units

67,500 units

54,000 units

40,500 units

4. Norman Company manufactures customized desks. The
following pertains to Job No. 953:

Direct materials used $8,400

Direct labor hours worked 300

Direct labor rate per hour $16.00

Machine hours used 200

Applied factory overhead rate per machine hour $30.00

What is the total manufacturing cost for Job No. 953?

$17,600

$19,200

$20,600

$22,200

5. The master budget of Benedict Company shows that the
planned activity level for next year is expected to be 50,000 machine hours. At
this level of activity, the following manufacturing overhead costs are
expected:

Indirect labor $240,000

Machine supplies 60,000

Indirect materials 70,000

Depreciation on factory building 50,000

Total manufacturing overhead $420,000

A flexible budget for a level of activity of 60,000 machine
hours would show total manufacturing overhead costs of

$494,000

$420,000

$504,000

$454,000

6. Sonoma Winery has fixed costs of $10,000 per year. Its
warehouse sells wine with variable costs of 80% of its unit selling price. How
much in sales does Sonoma need to break even per year?

$8,000

$2,000

$12,500

$50,000

7. Sportly, Inc. completed Job No. B14 during 2008. The job
cost sheet listed the following:

Direct materials $33,000

Direct labor $18,000

Manufacturing overhead applied $12,000

Units produced 3,000 units

Units sold 1,800 units

How much is the cost of the finished goods on hand from this
job?

$63,000

$37,800

$25,200

$30,600

8. Barnes and Miller Manufacturing is trying to determine
the equivalent units for conversion costs with 3,000 units of endingwork in
process at 80% completion and 14,000 physical units. There are no beginning
units in the department. Conversion costs occur evenly throughout the entire
production period. What are the equivalent units for conversion costs for the
current period?

17,000

16,800

2,400

13,400

9. Honrad Company’s Assembly Department has materials cost
at $4 per unit and conversion cost at $8 per unit. There are 9,000 units in
ending work in process, all of which are 70% complete as to conversion costs.
How much are total costs to be assigned to inventory?

$50,400

$86,400

$75,600

$108,000

10. McNally Manufacturing Company reported the following
year-end information:

Beginning work in process inventory $ 46,000

Beginning raw materials inventory 24,000

Ending work in process inventory 50,000

Ending raw materials inventory 20,000

Raw materials purchased 680,000

Direct labor 240,000

Manufacturing overhead 100,000

How much is McNally Manufacturing’s cost of goods
manufactured for the year?

$684,000

$1,024,000

$1,020,000

$1,028,000

11. Wynne Company’s high and low level of activity last year
was 60,000 units of product produced in May and 20,000 units produced in
November. Machine maintenance costs were $78,000 in May and $30,000 in
November. Using the high-low method, determine an estimate of total maintenance
cost for a month in which production is expected to be 45,000 units.

$67,500

$72,000

$58,500

$60,000

12. The per-unit standards for direct labor are 2 direct
labor hours at $15 per hour. If in producing 1,200 units, the actual direct
labor cost was $32,000 for 2,000 direct labor hours worked, the total direct
labor variance is

$1,200 U

$4,000 F

$2,500 U

$4,000 U

13. Use the following table.

Present Value of an Annuity of 1

Period 8% 9% 10%

1 .926 .917 .909

2 1.783 1.759 1.736

3 2.577 2.531 2.487

A company has a minimum required rate of return of 9% and is
considering investing in a project that costs $175,000 and is expected to
generate cash inflows of $70,000 at the end of each year for three years. The
net present value of this project is

$177,170

$35,000

$17,718

$2,170

14. Timex Corporation recorded operating data for its Cheap
division for the year. Timex requires its return to be 10%.

Sales $ 700,000

Controllable margin 80,000

Total average assets 2,000,000

Fixed costs 50,000

What is the ROI for the year?

4%

35%

(6%)

1.5%

15. If a company had a contribution margin of $500,000 and a
contribution margin ratio of 40%, total variable costs must have been

$750,000

$300,000

$1,250,000

$200,000

16. In the month of April, a department had 500 units in the
beginning work in process inventory that were 60% complete. These units had
$20,000 of materials costs and $15,000 of conversion costs. Materials are added
at the beginning of the process and conversion costs are added uniformly
throughout the process. During April, 10,000 units were completed and
transferred to the finished goods inventory and there were 2,000 units that
were 25% complete in the ending work in process inventory on April 30. During
April, manufacturing costs charged to the department were: Materials $460,000;
Conversion costs $510,000.

The cost assigned to the units transferred to finished goods
during April was

$900,000

$905,000

$940,000

$895,000

17. Wayman Company uses flexible budgets. At normal capacity
of 8,000 units, budgeted manufacturing overhead is: $48,000 variable and
$135,000 fixed. If Wayman had actual overhead costs of $187,500 for 9,000 units
produced, what is the difference between actual and budgeted costs?

$1,500 unfavorable

$1,500 favorable

$4,500 unfavorable

$6,000 favorable

18. There are no units in process at the beginning of the
period, 1,000 units in process at the end of the period that are 40% complete,
and 10,000 units transferred out during the period. Based on this information,
there were 9,600 equivalent units of production during the period.

True

False

19. Materials costs of $200,000 and conversion costs of
$214,200 were charged to a processing department in the month of September.
Materials are added at the beginning of the process, while conversion costs are
incurred uniformly throughout the process. There were no units in beginning
work in process, 100,000 units were started into production in September, and there
were 8,000 units in ending work in process that were 40% complete at the end of
September.

What was the total amount of manufacturing costs assigned to
those units that were completed and transferred out of the process in
September?

$184,000

$391,000

$414,200

$425,200

20. Use the following information.

Raw materials inventory, January 1 $ 20,000

Raw materials inventory, December 31 40,000

Work in process, January 1 18,000

Work in process, December 31 12,000

Finished goods, January 1 40,000

Finished goods, December 31 32,000

Raw materials purchases 1,000,000

Direct labor 460,000

Factory utilities 150,000

Indirect labor 50,000

Factory depreciation 400,000

Selling and administrative expenses 420,000

Direct materials used is

$1,060,000

$1,020,000

$1,000,000

$980,000

21. Using vertical analysis of the income statement, a
company’s net income as a percentage of net sales is 10%; therefore, the cost
of goods sold as a percentage of sales must be 90%.

True

False

22. Doris Co. is considering purchasing a new machine which
will cost $200,000, but which will decrease costs each year by $40,000. The
useful life of the machine is 10 years. The machine would be depreciated
straight-line with no residual value over its useful life at the rate of $20,000/year.
The cash payback period is

4 years

4.5 years

5 years

10 years

23. Eminen Music produces 60,000 CDs on which to record
music. The CDs have the following costs:

Direct Materials $11,000

Direct Labor 15,000

Variable Overhead 3,000

Fixed Overhead 7,000

Eminem could avoid $4,000 in fixed overhead costs if it
acquires the CDs externally. If cost minimization is the major consideration
and the company would prefer to buy the 60,000 units externally, what is the
maximum external price that Eminem would expect to pay for the units?

$32,000

$29,000

$36,000

$33,000

24. Raylight Products planned to use 1 yard of plastic per
unit budgeted at $81 a yard. However, the plastic actually cost $80 per yard.
The company actually made 2,600 units, although it had planned to make only
2,200 units. Total yards used for production were 2,640. How much is the total
materials variance?

$32,400 U

$3,240 U

$2,640 F

$600 U