# PF 061683RR

PF 061683RR PLANNING PERFORMANCE

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:

Direct material           20 pounds
Direct labor    0.1 hours

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

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

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:

Personnel expenses   \$22,100
Medical supplies       1,100
Occupancy expenses             5,600
Total expenses           \$32,500
Actual results for January: Revenue
Personnel expenses   \$46,251
Medical supplies        \$19,348
Occupancy expenses             \$9,508

2. The activity variance for net operating income in January would be closest to
A. \$489 U. B. \$2,019 U. C. \$489 F.
D. \$2,019 F.

3. Last year, the House of Orange had sales of \$826,650, net operating income of \$81,000, and operating assets of \$84,000 at the beginning of the year and \$90,000 at the end of the year. What was the company’s turnover rounded to the nearest tenth?
A. 9.8
B. 10.2
C. 9.5
D. 9.2

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:

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

Actual results for December: Revenue

Personnel expenses   \$51,009

Medical supplies        \$17,425
Occupancy expenses             \$9,240

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

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

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

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

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:

Direct material           20 pounds
Direct labor    0.1 hours

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

6. The labor efficiency variance for January is
A. \$350 U. B. \$475 F. C. \$110 F. D. \$130 U.

7. Which of the following will not result in an increase in return on investment (ROI), assuming other factors remain the same?
A. An increase in operating assets
B. An increase in net operating income
C. An increase in sales
D. A reduction in expenses

8. 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

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

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:

Direct material           20 pounds
Direct labor    0.1 hours

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. \$125 F. D. \$40 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:

Revenue         -____
Personnel expenses   \$27,100
Medical supplies       1,500
Occupancy expenses             6,000
Total expenses           \$37,600
Actual results for December: Revenue
Personnel expenses   \$51,009
Medical supplies        \$17,425
Occupancy expenses             \$9,240

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

12. Super Drive is a computer hard-drive manufacturer. The company’s balance sheet for the fiscal year ended on November 30 appears below:
Assets: Cash
Accounts receivable
Inventory
Property, plant, and equipment
Total Assets
Liabilities and stockholders’ equity: Accounts payable
Common stock Retained earnings Total liabilities and stockholders’ equity

Additional information regarding Super Drive’s operations appears below:

• Sales are budgeted at \$520,000 for December and \$500,000 for January.
• Collections are expected to be 60% in the month of sale and 40% in the month following sale. There are no bad debts.
• 80% of the disk-drive components are purchased in the month prior to the month of the sale, and 20%
are purchased in the month of the sale. Purchased components comprise         40% of the cost of goods sol
• Payment for components purchased is made in the month following the purchase.
• Assume that the cost of goods sold is 80% of sales.
The budgeted cash collections for the upcoming December should be
A. \$402,000. B. \$520,000. C. \$462,000. D. \$208,000.

13. The budget or schedule that provides necessary input data for the direct-labor budget is the
A. schedule of cash collections.
B. production budget.
C. raw materials purchases budget.
D. cash budget.

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:

Direct material           20 pounds
Direct labor    0.1 hours

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

14. The materials quantity variance for January is
A. \$750 F. B. \$300 F. C. \$800 U. D. \$300 U.

15. Lyons Company consists of two divisions, A and B. Lyons Company reported a contribution margin of
\$50,000 for Division A and had a contribution margin ratio of 30% in Division B, when sales in Division B
were \$200,000. Net operating income for the company was \$25,000, and traceable fixed expenses were
\$40,000. Lyons Company’s common fixed expenses were
A. \$45,000. B. \$40,000. C. \$70,000. D. \$85,000.

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:

Personnel expenses   \$22,100
Medical supplies       1,100
Occupancy expenses             5,600
Total expenses           \$32,500

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

16. The activity variance for personnel expenses in January would be closest to
A. \$261 F. B. \$661 F. C. \$661 U. D. \$261 U.

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:

Direct material           20 pounds
Direct labor    0.1 hours

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

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

18. 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’s calculated based on the sales budget and the desired ending inventory.
D. It summarizes the costs of producing units for the budget period.

19. 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. \$48,200. C. \$40,970. D. \$33,840.

20. 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. \$10.40. B. \$9.10. C. \$7.00. D. \$11.83.