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1)
Warranty claims–$120,000
Product liability lawsuits –$200,000
Rework costs — $600,000
Quality training — $350,000
Inspection of incoming materials — $900,000
Total yearly sales — $50,000,000
What are total internal failure costs ?
A. $320,000 C. $600,000
B. $350,000 D. $900,000
2) Each car requires four wheels, ad 30 minutes of labor time at a rate of $12 per hour. January’s beginning balance of wheels is 6,000. What is the direct labor budget for March?
January 15,000 cars
February 12,000 cars
March 16,000 cars
April 15,000 cars.
A. 96,000 C. 192,000
B. 187,200 D. 202,500
3) Nickerson, Inc. has developed a variable-overhead rate of $10 per machine hour and estimates fixed overhead at $250,000 for production up to 100,000 units per year. If the production manager estimates 9,000 machine hours for the production of 90,000 units next year, what are estimated variable-overhead costs?
A. $90,000 C. $340,000
B. $250,000 D. $900,000
4) Units started into production – 1,200,000
Total good units completed – 1,115,000
Total hours of value-added production time – 575,000
Total production hours – 750,000
15. What is the throughput per hour? (round your answer to two decimals.)
A. 1.49 C. 1.94
B. 1.60 D. 2.09
16. Actual variable-overhead expenses were $33,750 for production of 6,000 units. Variable overhead is applied at a rate of $3.00 per direct labor hour, two direct labor hours are budgeted for each unit, and 11,990 direct labor hours were incurred. What is the total variable-overhead variance?
A. $2,250 F C. $2,220 F
B. $2,250 U D. $2,220 U
Use the following sales forecast information to answer question 17:
January 15,000 cars
February 12,000 cars
March 16,000 cars
17. Each car requires four wheels, and requires 30 minutes of labor time at a rate of $12 per hour. January’s beginning balance of wheels is 6,000. If the company tries to maintain 10% if the next month’s forecasted production needs in inventory, what are the projected wheel purchases for February?
A. 12,000 C. 49,600
B. 13,600 D. 72,300
Use the following monthly data regarding each division within a company to answer questions 18 and 19:
Division A Division B Division C
Revenues $15,000 $15,000 $20,000
Variable Costa $12,000 $10,000 $8,000
Contribution Margin $3,000 $5,000 $12,000
Traceable Fixed Costs $2,000 $2,000 $8,000
Common fixed costs of $6,000 are divided equally among divisions
What is the monthly net income for Division A?
A. $2,000 C. ($4,000)
B. $1,000 D. ($1,000)
use the following information to answer questions 21 and 21:
Tie One On budgeted for production and sales of 12,000 silk ties, but actually produced 11,000 and sold 10,500. Each tie has the following standards: 1 foot of material at a budgeted cost of $1.50 per foot and 20 minutes of sewing time at a cost of $0.25 per minutes. The ties sell for $8. Actual material costs for the production of 11,000 ties were $1.54 per foot. Actual total sewing time was 242,000 minutes and labor costs were $0.24 per minute.
20. What was the budgeted contribution margin per tie?
A. $1.18 C. $1.46
B. $1.22 D. $1.50
21. What was the actual contribution margin per tie?
A. $1.18 C. $1.46
B. $1.22 D. $1.50
Use the following sales forecast information to answer question 22:
January 15,000 bags
February 12,000 bags
March 16,000 bags
22. If the company maintains 10% of the next month’s forecasted sales in inventory, what is the projected production for January?
A. 14,700 C. 16,200
B. 15,000 D. 17,500
Use the following information to answer questions 23 and 24:
Budgeted production and sales -5,000 units
Actual production and sales -6,000 units
Direct material standards – 1.5 pounds of material @$1.52 per pound
Direct labor standards – 2 hours of assembly time @$12.50 per hour
Sales price — $32
Actual direct material costs -8,600 pounds @ $1.50 per pound
Actual direct labor costs – 13,200 hours @ $12.25 per hour
23. What is the flexible budget variance?
A. $9,100 F C. $10,920 F
B. $9,100 U D. $10,920 U
24. What is the sales volume variance?
A. $6,000 C. $4,720
B. $5,000 D. $2,900
Tea Leaves, Inc has a policy of maintaining 20% of the next year’s expected sales in the ending inventory of any year. During 20×4, they budgeted and sold 120,000 tea bags. Sales of 125,000 tea bags are budgeted for 20×5. How many bags were purchased during 20×7?
A. 120,000 C. 125,000
B. 121,000 D. 145,000