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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