Reference no: EM1390281

Assignation Individual ()

AI 3 (Master and Flexible Budget)

1. Orange Company is planning to sell 200 buckets and produce 190 buckets during March. Each bucket requires 500 grams of plastic and one-half hour of direct labor. Plastic costs $10 per 500 grams and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Secret Prizes has 300 kilos of plastic in beginning inventory and wants to have 200 kilos in ending inventory. How much is the total amount of budgeted direct labor for March?

a.         $1,500             b. $3,000                     c. $1,425                     d. $2,850

 

2.         The direct materials budget shows:

Units to be produced  3,000

Total pounds needed for production  12,000

Total materials required          13,200

What are the direct materials per unit?

a. .44 pounds         b.  4.0 pounds       c. 4.4 pounds      d. Can't  be determined from the data provided.

 

3. Secret Prizes, Inc. had the following information available:

Expected Costs and Selling Price Based on 5,000 units:

Variable manufacturing costs per unit            $32

Fixed manufacturing costs per unit    $20

Selling price per unit   $70

Expected production level      5,000 units

 

In the flexible budget at 10,000 units, what is the total manufacturing cost?

a. $250,000                 b. $420,000                 c.  $520,000    d. $700,000

 

4. At January 1, 2008, Metric, Inc. has beginning inventory of 2,000 surfboards. Metric estimates it will sell 5,000 units during the first quarter of 2008 with a 12% increase in sales each quarter. Metric's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2008?

a. $225,000     b. $975,000                 c. $940,800                 d. $6,272

 

5. If the required direct materials purchases are 18,000 pounds, the direct materials required for production is three times the direct materials purchases, and the beginning direct materials are three and a half times the direct materials purchases, what are the desired ending direct materials in pounds?

a. 45,000                     b. 9,000                       c. 27,000                     d. 18,000

 

6. Brough Company has the following budgeted sales: July $100,000, August $150,000 and September $125,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during September are

a. $140,000     b. $132,500                 c. $131,250                 d. $125,000

 

 7. The production budget shows expected unit sales of 32,000. Beginning finished goods units are 5,600.  Required production units are 33,600. What are the desired endings finished goods units?

     a. 4,000                  b. 5,600                       c. 6,400                                   d. 7,200

 

8. Marian Company's direct materials budget shows total cost of direct materials purchases for January $125,000, February $150,000 and March $175,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for March are

a. $165,000                 b. $160,000                 c. $150,000                  d. $130,000

 

9. For the current year, Andres Company's static budget sales were $225,000.  Actual sales for the current year were $220,000.  Actual sales last year were $219,000.  Expected sales last year were $225,000.  What is the static budget variance for sales in the current year?

a. $5,000 Favorable                 b. $5,000 Unfavorable

c. $6,000 Favorable                 d.$6,000 Unfavorable

 

10. Gaston Production is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.50 per pound and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Sudler has 2,600 pounds of clay mix in beginning inventory and wants to have 3,000 pounds in ending inventory.

What is the total amount to be budgeted for direct labor for the month?

a.$2,175                      b. $8,700                     c. $2,250                     d. $34,800

 

11. Johnson Company expects to purchase $90,000 of materials in July and $105,000 of materials in August. Three-quarters of all purchases are paid for in the month of purchase, and the other one-fourth is paid for in the month following the month of purchase. How much will August's cash disbursements for materials purchases be?

a. $67,500       b. $78,750                   c. $101,250                 d. $105,000

 

12. Payla's 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.

a. $67,500                   b. $72,000                   c. $58,500                   d. $60,000

 

13. White Company had the following information available:

Expected Costs and Selling Price Based on 5,000 Units:

Variable manufacturing costs per unit            $32

Fixed manufacturing costs per unit    $20

Selling price per unit   $70

Expected production level      5,000 units

In the flexible budget at 15,000 units, what is the total manufacturing cost?

a. $480,000                 b. $580,000                 c. $680,000                 d. $780,000

 

14. Suderman Production is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.50 per pound and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Suderman has 2,600 pounds of clay mix in beginning inventory and wants to have 3,000 pounds in ending inventory.

What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

a.       25,520             b. 25,120                     c. 25,920                     d. 26,800

 

15. A company's past experience indicates that 60% of its credit sales are collected in the month of sale, 30% in the next month, and 5% in the second month after the sale; the remainder is never collected. Budgeted credit sales were:

January            $180,000

February          108,000

March              270,000

The cash inflow in the month of March is expected to be

a. $203,400     b. $153,900                 c. $162,000                 d. $194,400

 

16. The following data are for Cascabell Corporation:          

 

                                    Actual             Static Budget              Flexible Budget for

Actual Sales Activity

Units                           18,000             16,000                         18,000

Sales                            $360,000         $320,000                     $360,000

Variable costs              234,000           192,000                       216,000

Contribution margin    $126,000         $128,000                     144,000

Fixed costs                  76,000             80,000                            80,000

Operating income        $50,000           $48,000                       $64,000

 

      The flexible budget variance for operating income is:

a. $2,000 Favorable     b. $2,000 Unfavorable            c. $14,000 Favorable   d. $14,000 Unfavorable

 

17. The production budget shows expected unit sales are 50,000. The required production units are 52,000. What are the beginning and desired ending finished goods units, respectively?

Beginning Units         Ending Units               Beginning Units                 Ending Units

  a. 5,000                         3,000                                   b. 3,000                       5,000

  c. 2,000                         5,000                                   d. 5,000                       2,000

 

18. Jetsan. Com plans to sell 2,000 purple lawn chairs during May, 1,900 in June, and 2,000 during July. The company keeps 15% of the next month's sales as ending inventory. How many units should Jetsan.Com produce during June?

a. 1,915                       b. 2,200           c. 1,885           d. Not enough information to determine. 

 

19. Norman Company currently produces cardboard boxes in an automated process.  Expected production per month is 40,000 units.  The required direct materials cost $0.30 per unit.  Manufacturing fixed overhead costs are $24,000 per month.  The cost driver for manufacturing fixed overhead costs is units of production.  In a flexible budget at 20,000 units, the total fixed cost is ________ per month and the total variable cost is ________ per month.

a. $24,000; $6,000                  b. $24,000; $12,000    c. $12,000; $6,000      d. $12,000; $12,000

 

20.  Matienzo Company had a static budgeted operating income of $8.6 million.  Actual operating income was $6.4 million.  What is the static-budget variance of operating income?

a. $2.2 million Favorable         b.  $2.2 million Unfavorable  

c. $6.4 million Favorable         d. $8.6 million Unfavorable

 

21. The following data are for Mike Corporation:

Flexible Budget for

                                            Actual                       Static Budget                  Actual Sales Activity

Units                                   18,000                                   16,000                               18,000

Sales                                $360,000                           $320,000                                   $360,000

Variable cost                      234,000                                 192,000                            216,000

Contribution margin          $126,000                               $128,000                          $144,000

Fixed costs                           76,000                                80,000                    80,000

Operating income               $50,000                                  $48,000                             $64,000

 

The static budget variance for operating income is ________.

$2,000 Favorable                    b. $2,000 Unfavorable                       

c.  $16,000 Favorable              d.  $16,000 Unfavorable

 

22.       Aries Company's activity for the first three months of 2008 is as follows:

                      Machine Hours              Electrical Cost

January            2,100                           $2,400

February          2,600                           $2,900

March              2,900                           $3,200

Using the high-low method, how much is the cost per machine hour?

a.         $1.00               b. $1.50                       c. $1.13                                   d. $0.89

 

23. Karper Company's direct materials budget shows total cost of direct materials purchases for April $200,000, May $240,000 and June $280,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for June are

a.         $264,000         b. $256,000                 c. $240,000                 d. $208,000

 

24. Dardan Production is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.50 per pound and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Dardan has 2,600 pounds of clay mix in beginning inventory and wants to have 3,000 pounds in ending inventory.

 What is the total amount to be budgeted for manufacturing overhead for the month?

a.       $2,392.50        b. $2,475                     c. $9,570                     d. $9,900

 

25.  Raxmire Company makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available:

                                    Variable Cost Per Unit Sold                           Monthly Fixed Cost

Sales commissions                   $0.60                                                   $ 3,000

Shipping                                  1.20

Advertising                             0.30

Executive salaries                                                                                20,000

Depreciation on office equipment                                                         4,000

Other                                       0.35                                                     14,000

 

Expenses are paid in the month incurred. If the company has budgeted to sell 4,000 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October?

a.       $8,400             b. $9,200                     c. $50,800                   d. $9,800

 

26.  At the high level of activity in November, 7,000 machine hours were run and power costs were $12,000. In April, a month of low activity, 2,000 machine hours were run and power costs amounted to $6,000. Using the high-low method, the estimated fixed cost element of power costs is

a. $12,000                   b. $6,000                      c. $3,600                    d. $8,400

 

 27. The direct materials budget shows:

Desired ending direct materials          36,000 pounds

Total materials required          54,000 pounds

Direct materials purchases      47,400 pounds

The total direct materials needed for production is

a.       18,000 pounds                       b. 6,600 pounds          c. 11,400 pounds         d. 101,400 pounds

 

28. The production budget shows that expected unit sales are 40,000. The total required units are 45,000. What are the required production units?

a. 5,000           b. 7,500           c. 10,000         d. Cannot be determined from the data provided.

 

29. A company budgeted unit sales of 102,000 units for January, 2008 and 120,000 units for February, 2008. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 30,600 units of inventory on hand on December 31, 2007, how many units should be produced in January, 2008 in order for the company to meet its goals?

a. 107,400 units           b. 102,000 units                      c. 96,600 units             d. 138,000 units

 

30. The following information is taken from the production budget for the first quarter:

Beginning inventory in units   900

Sales budgeted for the quarter            342,000

Capacity in units of production facility          354,000

How many finished goods units should be produced during the quarter if the company desires 2,400 units available to start the next quarter?

a.       343,500                       b. 340,500                   c. 355,500                   d. 344,400

 

31. Normando Company currently produces cardboard boxes in an automated process.  Expected production per month is 40,000 units.  The required direct materials cost $0.30 per unit.  Manufacturing fixed overhead costs are $24,000 per month.  The cost driver for manufacturing fixed overhead costs is units of production.  In a static budget at 40,000 units, the total fixed cost is ________ per month and the total variable cost is ________ per month.

a. $24,000; $6,000      b. $24,000; $12,000    c. $12,000; $6,000      d. $12,000; $12,000