Expert Solutions

1. Pnamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below.
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Determine the activity rate for procurement per purchase order.
a. $43.53
b. $37.00
c. $18.50
d. $15.42
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Solution

2. Take the data from question no.1
Determine the activity rate for materials handling per move.
a. $20.83
b. $80.65
c. $58.82
d. $50.00
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Solution

3.  Take the data from question no.1
Determine the activity-based cost for each disk drive unit.
a. $130.69
b. $92.25
c. $394.12
d. $279.57

4. The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units.
Compute the material price variance.
b. 6,000U
c. 59,400U

5. The Lucy Corporation purchased and used 129,000 board feet of lumber in production, at a total cost of $1,548,000. Original production had been budgeted for 22,000 units with a standard material quantity of 5.7 board feet per unit and a standard price of $12 per board foot. Actual production was 23,500 units.
Compute the material quantity variance.
a. 59,400F
b. 59,400U
c. 63,000F
d. 63,000U

6. The three most common cost behavior classifications are:
a. variable costs, product costs, and sunk costs
b. fixed costs, variable costs, and mixed costs
c. variable costs, sunk costs, and opportunity costs
d. variable costs, period costs, and differential costs

7. Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?
a. Units of production depreciation on factory equipment
b. Direct materials
c. Direct labor
d. Salary of a factory supervisor

8. Most operating decisions of management focus on a narrow range of activity called the:
a. strategic level of production
b. relevant range of production
c. tactical operating level of production
d. optimal level of productio

9. Which of the following describes the behavior of the variable cost per unit?
a. Varies in decreasing proportion with changes in the activity level
b. Varies in direct proportion with the activity level
c. Remains constant with changes in the activity level
d. Varies in increasing proportion with changes in the activity level

10. The systematic examination of the relationships among selling prices, volume of sales and production, costs, and profits is termed:
a. gross profit analysis
b. budgetary analysis
c. contribution margin analysis
d. cost-volume-profit analysis

11. Scott Manufacturing Co.’s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $23,000. At 12,000 units of production, a flexible budget would show:
a. variable and fixed costs totaling $67,000
b. variable costs of $52,800 and $27,600 of fixed costs
c. variable costs of $52,800 and $23,000 of fixed costs
d. variable costs of $44,000 and $23,000 of fixed costs

12. For March, sales revenue is $1,000,000; sales commissions are 4% of sales; the sales manager’s salary is $80,000; advertising expenses are $75,000; shipping expenses total 1% of sales; and miscellaneous selling expenses are $2,100 plus 1% of sales. Total selling expenses for the month of March are:
a. $187,550
b. $194,100
c. $217,100
d. $192,100

13. The total manufacturing cost variance consists of:
a. Direct materials cost variance, direct labor cost variance, variable factory overhead controllable variance
b. Direct materials price variance, direct labor cost variance, and fixed factory overhead volume variance
c. Direct materials cost variance, direct labor cost variance, factory overhead cost variance
d. Direct materials cost variance, direct labor rate variance, and factory overhead cost variance

14. The following data relate to direct labor costs for the current period:
What is the direct labor time variance?
a. $5,000 favorable
b. $17,500 unfavorable
c. $22,500 favorable
d. $18,000 unfavorable

15. All of the following can be used as an allocation base for calculating factory overhead rates except:
a. total overhead costs
b. direct labor hours
c. direct labor dollars
d. square footage

16. Which of the following is not a cost pool used with the activity-based costing method?
a. production setups
b. direct labor hours
c. machine hours

17. Activity rates are determined by
a. dividing the cost budgeted for each activity pool by the actual activity base in that pool.
b. dividing the actual cost for each activity pool by the actual activity base for that pool.
c. dividing the cost budgeted for each activity pool by the estimated activity base for that pool.
d. dividing the actual cost for each activity pool by the estimated activity base for that pool.

18. Shubelik Company is changing to an activity-based costing method. They have determined that they will use three cost pools. They are setups, inspections, and assembly. Which of the following would be used as the activity base for assembly?
a. number of units to be produced
b. number of direct labor hours
c. number of inspections
d. number of setups

19. For the coming year, River Company estimates fixed costs at $109,000, the unit variable cost at $21, and the unit selling price at $85. Determine the following:
a.  The break-even point in units of sales.
b.  The unit sales required to realize operating income of $150,000.
c.  The probable operating income if sales total $500,000.

20. Prepare a flexible budget for Cedar Jeans Company using production levels of 16,000, 18,000, and 20,000 units produced. The following is additional information necessary to complete the budget:
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23. Problem 22-6
The following information relates to manufacturing overhead for the Chapman Company:
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Required:
a.  Compute the volume variance.
b.  Compute the controllable variance.
c.  Compute the total factory overhead cost variance.