# Penn Foster 061683RR

Use the following information to answer this question
Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for
3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the
following data concerning the formulas used in its budgeting and its actual results for December:
Data used in budgeting:
Fixed element                    Variable element
per month                          per client-visit
Revenue                               ____-____                               \$25.10
Personnel expenses               \$27,100                                 \$7.10
Medical supplies                1,500 4.50
Occupancy expenses                 6,000                                    1.00
Total expenses                       \$37,600                               \$12.70

Actual results
for December:
Revenue                                 \$96,299
Personnel expenses             \$51,009
Medical supplies                  \$17,425
Occupancy expense s            \$9,240

1. The revenue variance for December would be closest to
A. \$3,680 U.
B. \$3,680 F.
C. \$3,429 F.
D. \$3,429 U.

Use the following information to answer this question.
Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for
3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the
following data concerning the formulas used in its budgeting and its actual results for December:
Data used in budgeting:
Fixed element              Variable element
per month                   per client-visit

Revenue                                       ____-____        \$25.10
Personnel expenses                      \$27,100                     \$7.10
Medical supplies                               1,500                            4.50
Occupancy expenses                        6,000                           1.00
Total expenses \$37,600                 \$12.70

Actual results
for December:

Revenue                                              \$96,299
Personnel expenses                      \$51,009
Medical supplies                             \$17,425
Occupancy expenses                      \$9,240

2. The medical supplies in the flexible budget for December would be closest to
A. \$17,472.
B. \$17,378.
C. \$18,150.
D. \$18,105.

3. 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’s calculated based on the sales budget and the desired ending inventory.

Use the following information to answer this question.
Werber Clinic uses client visits as its measure of activity. During January, the clinic budgeted for 2,700
client visits, but its actual level of activity was 2,730 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:
Data used in budgeting:
Fixed element  Variable element
per month                          per client-visit
Revenue                                              ___-___                               \$33.60
Personnel expenses                      \$22,100                    \$8.70
Medical supplies                                 1,100                                      6.60
Occupancy expenses                        5,600                     1.60
Total expenses                               \$32,500                                 \$17.30

Actual results
for January:
Revenue                                              \$93,408
Personnel expenses                      \$46,251
Medical supplies                             \$19,348
Occupancy expense                       s \$9,508

4. The activity variance for administrative expenses in January would be closest to
A. \$8 F.
B. \$12 F.
C. \$8 U.
D. \$12 U.

5. The Charade Company is preparing its Manufacturing Overhead budget for the fourth quarter of the
year. The budgeted variable factory overhead is \$5.00 per direct-labor hour; the budgeted fixed factory
overhead is \$75,000 per month, of which \$15,000 is factory depreciation. If the budgeted direct-labor time
for December is 8,000 hours, then total budgeted factory overhead per direct-labor hour (rounded) is
A. \$9.38.
B. \$12.50.
C. \$16.25.
D. \$14.38.

Use the following information to answer this question.
The Adams Company, a merchandising firm, has budgeted its activity for November according to the
following information:
• Sales were at \$450,000, all for cash.
• Merchandise inventory on October 31 was \$200,000.
• The cash balance on November 1 was \$18,000.
• Selling and administrative expenses are budgeted at \$60,000 for November and are paid for in cash.
• Budgeted depreciation for November is \$25,000.
• The planned merchandise inventory on November 30 is \$230,000.
• The cost of goods sold is 70% of the selling price.
• All purchases are paid for in cash.

6. The budgeted cash disbursements for November are
A. \$375,000.
B. \$405,000.
C. \$345,000.
D. \$530,000.

Use the following information to answer this question.
Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for
3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the
following data concerning the formulas used in its budgeting and its actual results for December:
Data used in budgeting:
Fixed element  Variable element
per month                          per client-visit
Revenue                                              ____-____                           \$25.10
Personnel expenses                      \$27,100                                  \$7.10
Medical supplies                                  1,500                                   4.50
Occupancy expenses                       6,000                     1.00
Total expenses                              \$37,600                                 \$12.70

Actual results
for December:
Revenue                                \$96,299
Personnel expenses            \$51,009
Medical supplies                  \$17,425
Occupancy expenses            \$9,240

7. The activity variance for personnel expenses in December would be closest to
A. \$71 U.
B. \$2,361 F.
C. \$2,361 U.
D. \$71 F.

Use the following information to answer this question.
Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for
3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the
following data concerning the formulas used in its budgeting and its actual results for December:
Data used in budgeting:
Fixed element  Variable element
per month                          per client-visit
Revenue                                              ____-____                           \$25.10
Personnel expenses                      \$27,100                                 \$7.10
Medical supplies                             1,500                                      4.50
Occupancy expenses                     6,000                                        1.00
Total expenses                           \$37,600                                   \$12.70

Actual results
for December:
Revenue                                              \$96,299
Personnel expenses                      \$51,009
Medical supplies                             \$17,425
Occupancy expenses                     \$9,240

8. The spending variance for medical supplies in December would be closest to
A. \$725 U.
B. \$725 F.
C. \$680 F.
D. \$680 U.

9. Coles Company, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows:
August                  14,000 units
September         14,500 units
October               15,500 units
November          12,600 units
December           11,900 units

The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month’s production needs. On July 31, this requirement wasn’t met because only 2,500 yards of Material K were on hand. The cost of Material K is \$0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year.
The total cost of Material K to be purchased in August is
A. \$42,300.
B. \$40,970.
C. \$48,200.
D. \$33,840.

Use the following information to answer this question.
Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
Standard             Standard Cost
Quantity              per bag
Direct material               20 pounds            \$8.00
Direct labor                       0.1 hours              \$1.10

The company had no beginning inventories of any kind on January 1. Variable overhead is applied to
production on the basis of standard direct-labor hours. During January, the company recorded the following activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of \$32,300
• Direct-labor worked: 390 hours at a cost of \$4,875
• Inventory of direct materials on January 31: 3,000 pounds

10. The total variance (both rate and efficiency) for variable overhead for January is
A. \$100 U.
B. \$85 F.
C. \$40 F.
D. \$125 F.

11. Vandall Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 7,300 units, but its actual level of activity was 7,340 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April:
Data used in budgeting:
Fixed element Variable element
per month                          per unit
Revenue                                              ___-___                                \$35.40
Direct labor                                                        0                                \$3.30
Direct materials                                               0                              15.90
Selling and
Total expenses                                                \$75,800              \$20.50

Actual results
for April:
Revenue                                              \$254,146
Direct labor                                           \$24,722
Direct materials                                              \$116,496
Selling and

The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for April would be closest to
A. \$6,740 U.
B. \$6,144 F.
C. \$6,144 U.
D. \$6,740 F.

Use the following information to answer this question.
The Adams Company, a merchandising firm, has budgeted its activity for November according to the
following information:
• Sales were at \$450,000, all for cash.
• Merchandise inventory on October 31 was \$200,000.
• The cash balance on November 1 was \$18,000.
• Selling and administrative expenses are budgeted at \$60,000 for November and are paid for in cash.
• Budgeted depreciation for November is \$25,000.
• The planned merchandise inventory on November 30 is \$230,000.
• The cost of goods sold is 70% of the selling price.
• All purchases are paid for in cash.

12. The budgeted net income for November is
A. \$135,000.
B. \$75,000.
C. \$50,000.
D. \$68,000.

13. The cash budget must be prepared before you can complete the
A. production budget.
B. raw materials purchases budget.
C. budgeted balance sheet.
D. schedule of cash disbursements.

14. The company plans to sell 22,000 units of Product WZ in June. The finished-goods inventories on June 1 and June 30 are budgeted to be 100 and 400 units, respectively. The direct labor hours are 11,000 and the direct labor rate is \$10.50. Budgeted direct-labor costs for June would be
A. \$455,700.
B. \$117,075.
C. \$462,000.
D. \$234,150.

Use the following information to answer this question.
Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
Standard                              Standard Cost
Quantity                                   per bag
Direct material                                 l 20 pounds                                  \$8.00
Direct labor                                        0.1 hours                                      \$1.10

The company had no beginning inventories of any kind on January 1. Variable overhead is applied to
production on the basis of standard direct-labor hours. During January, the company recorded the following
activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of \$32,300
• Direct-labor worked: 390 hours at a cost of \$4,875
• Inventory of direct materials on January 31: 3,000 pounds

15. The labor rate variance for January is
A. \$585 U.
B. \$475 U.
C. \$475 F.
D. \$585 F.

Use the following information to answer this question.
Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows:
Standard                              Standard Cost
Quantity                                     per bag
Direct material                                 l 20 pounds                                   \$8.00
Direct labor                                        0.1 hours                                       \$1.10

The company had no beginning inventories of any kind on January 1. Variable overhead is applied to
production on the basis of standard direct-labor hours. During January, the company recorded the following activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of \$32,300
• Direct-labor worked: 390 hours at a cost of \$4,875
• Inventory of direct materials on January 31: 3,000 pounds

16. The materials price variance for January is
A. \$1,640 U.
B. \$1,300 U.
C. \$1,640 F.
D. \$1,700 F.

17. The LFM Company makes and sells a single product, Product T. Each unit of Product T requires 1.3 hours of direct labor at a rate of \$9.10 per direct-labor hour. LFM Company needs to prepare a direct-labor budget for the second quarter of next year. The budgeted direct-labor cost per unit of Product T would be
A. \$7.00.
B. \$9.10.
C. \$11.83.
D. \$10.40.

18. Division X of Charter Corporation makes and sells a single product which is used by manufacturers of fork lift trucks. Presently it sells 12,000 units per year to outside customers at \$24 per unit. The annual capacity is 20,000 units and the variable cost to make each unit is \$16. Division Y of Charter Corporation would like to buy 10,000 units a year from Division X to use in its products. There would be no cost savings from transferring the units within the company rather than selling them on the outside market.
What should be the lowest acceptable transfer price from the perspective of Division X?
A. \$16.00
B. \$24.00
C. \$21.40
D. \$17.60

19. A company’s average operating assets are \$220,000, and its net operating income is \$44,000. The
company invested in a new project, increasing average assets to \$250,000 and increasing its net operating income to \$49,550. What is the project’s residual income if the required rate of return is 20%?
A. \$450
B. (\$450)
C. (\$600)
D. \$600

Use the following information to answer this question.
Werber Clinic uses client visits as its measure of activity. During January, the clinic budgeted for 2,700
client visits, but its actual level of activity was 2,730 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:
Data used in budgeting:
Fixed element Variable element
per month                          per client-visit
Revenue                                              ___-___                               \$33.60
Personnel expenses                      \$22,100                                 \$8.70
Medical supplies                                  1,100                                    6.60
Occupancy expenses                        5,600                      1.60
Total expenses                              \$32,500                                  \$17.30
Actual results
for January:
Revenue \$93,408
Personnel expenses \$46,251
Medical supplies \$19,348
Occupancy expenses \$9,508