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Exam 3 Spring 2010

Version #1

Choose the best answer for each question. Mark your answers in your test booklet and on your scan sheet. 1. Brummitt Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.05 direct labor-hours. The direct labor rate is $7.50 per direct labor-hour. The production budget calls for producing 9,100 units in May and 8,800 units in June. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months? A. $3,300.00 B. $3,412.50 C. $6,712.50 D. $3,356.25 2. The PDQ Company makes collections on credit sales according to the following schedule: 25% in month of sale 70% in month following sale 4% in second month following sale 1% uncollectible The following sales have been budgeted:

Cash collections in June would be: A. $113,400 B. $110,000 C. $111,000 D. $115,500 3. If the actual labor hours worked exceed the standard labor hours allowed, what type of variance will occur? A. Favorable labor efficiency variance. B. Favorable labor rate variance. C. Unfavorable labor efficiency variance. D. Unfavorable labor rate variance.

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660 2 . the company planned for activity of 14 snow-days. is updated with actual costs as they occur during the period. During April the company will need to borrow: A. $4. 250 hours 5. $6.000 D. is updated to reflect the actual level of activity during the period. budgeted balance sheet. ABC Company has a cash balance of $9. $9. D. B. The vehicle operating cost in the flexible budget for November would be closest to: A.000 on April 1. During October the company worked 625 direct labor-hours and produced 300 units. D. $7. B.000.280 D. C. D. 625 hours B. labor efficiency problems.000 B. C. The standard hours allowed for October would be: A. During April expected cash receipts are $45. 7. The company must maintain a minimum cash balance of $6. The cash budget must be prepared before you can complete the: A. $2.000. is only prepared using a computer spreadsheet application. Expected cash disbursements during the month total $52. For the month of November. but the actual level of activity was 19 snow-days. 6.118 C.000 C. A flexible budget is a budget that: A. 9. machine efficiency problems. 500 hours C. Hart Company's labor standards call for 500 direct labor-hours to produce 250 units of product. B.280. the purchase and use of lower than standard quality material. $9.003 B.840 per month plus $377 per snow-day. contains only variable production costs. C.000 8.4. production budget. $8. $9. schedule of cash disbursements. The actual vehicle operating cost for the month was $9. the purchase and use of higher than standard quality material. A favorable materials price variance coupled with an unfavorable material usage variance would most likely result from: A. 600 hours D. Ofarrell Snow Removal's cost formula for its vehicle operating cost is $1.000. raw materials purchases budget.

000 units. 14. Yumm Dairy Corporation manufactures carrot-flavored ice cream. The budget or schedule that provides necessary input data for the direct labor budget is the: A. $110. Roufs Inc.000 ounces C. fixed manufacturing overhead budget variance. raw materials purchases budget. 22. C. $120. bases its selling and administrative expense budget on budgeted unit sales.000 D.800 units are planned to be sold in April. 486. variable overhead efficiency variance. Scheduled production for the third quarter should be: A.500 B.960 C. The Waverly Company has budgeted sales for next year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. Yumm's production budget indicated the following units to be produced for the upcoming months: Four (4) ounces of carrots are needed for each gallon of ice cream. The budgeted fixed selling and administrative expense is $95. How many ounces of carrots should Yumm plan on purchasing during the month of February? A. 13. B. The remainder of the fixed selling and administrative expense represents current cash flows.500 C. The finished goods inventory at the start of the year is 3. B. 13.500 12. 510. $24. production budget. D.120 D. Which of the following variances is caused by a difference between the denominator activity in the predetermined overhead rate and the standard hours allowed for the actual production of the period? A. schedule of cash collections.10. fixed manufacturing overhead volume variance. variable overhead rate variance.800 B.360 per month. 474.000 ounces B.20 per unit. The variable selling and administrative expense is $3. Yumm also likes to have enough carrots on hand to cover 5% of the next month's production needs for carrots. 17. 490.000 ounces D.000 ounces 3 . cash budget. $85. C. 18.760 11. The sales budget shows 7. D. The cash disbursements for selling and administrative expenses on the April selling and administrative expense budget should be: A.160 per month. which includes depreciation of $9.

540 patient-visits. $1. $1. $634 F D. $61. The activity variance for vehicle operating cost in November would be closest to: A. but the actual level of activity was 20 snow-days.15.200 favorable 4 .552 unfavorable C.566 U D. $634 U Mzimba Sofa Company has developed the following manufacturing overhead standards for its sofa production.080 favorable B. the company planned for activity of 18 snow-days. $17.280 unfavorable D. $256 F C. What was Mzimba's variable overhead efficiency variance? A. the budgeted level of activity was 1. the spending variance for administrative expenses was: A.310 per month plus $317 per snow-day. The actual administrative expense was $21. Manufacturing overhead at Mzimba is applied to production on the basis of standard machine-hours. Last month. $714 U B.050. $8. Dunklin Medical Clinic measures its activity in terms of patient-visits. What was Mzimba's fixed manufacturing overhead volume variance? A. $12.000 $58 per machine hour The actual results last year were as follows: 17.9 hours $32 per machine hour $1.000 sofas . $118 F B.20 per patient-visit plus $14. The cost formula for administrative expenses is $3.766 unfavorable B.080 favorable 18. In the clinic's flexible budget performance report for last month. Expected Annual Volume Standard Machine Hours per sofa Variable Overhead Rate Fixed Overhead Budget Fixed Overhead Rate 20. $15.000 unfavorable D. Portsche Snow Removal's cost formula for its vehicle operating cost is $2. $73. The actual vehicle operating cost for the month was $8.044.920 unfavorable C.730. $42.620 patient-visits and the actual level of activity was 1.300 per month.822 U 16. $714 F C. $51. For the month of November.

400 favorable B.440 unfavorable D.680 favorable B. $51. $3. $17.850 unfavorable C.250 unfavorable D.Reenu Company manufactures wigs. What is Reenu's variable overhead rate variance for October? A. $26.100 unfavorable D.440 unfavorable C.400 favorable 22.900 unfavorable D.660 unfavorable B. What is Reenu's materials price variance (based on pounds purchased) for October? A. $14. $2.200 unfavorable C. The variable cost standards for wig production developed by Reenu are as follows: Variable overhead at Reenu is based on direct labor-hours. What is Reenu's materials quantity variance for October? A.700 favorable B. $8. $12. What is Reenu's labor efficiency variance for October? A. $9.300 unfavorable 21. $4. $14.600 favorable 20. $2. $27.420 unfavorable 5 .760 unfavorable C. The actual results for the month of October were as follows: 19. $7. $15. $1.

$6. $20. During April.115 B. The overall revenue and spending variance (i. 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.390 F B. The net operating income in the flexible budget for April would be closest to: A.425 D. $6.Murphree Clinic uses client-visits as its measure of activity.. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for April: 23. $13. $19.550 24.519 C.390 U D.265 F 6 .265 U C. but its actual level of activity was 3. the clinic budgeted for 3. $5. $14.300 client-visits. $5.e.350 client-visits.

970 client-visits. $6.600 favorable B.016 unfavorable 26. $38.000 direct labor-hours.600.200 unfavorable C.850 favorable B. and budgeted fixed overhead costs of $345.000 client-visits. but its actual level of activity was 2. the clinic budgeted for 3. What was Wriphoff's fixed manufacturing overhead budget variance for last year? A. $7. $15. $7.416 unfavorable D. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for March: 7 . $9.Wriphoff Company uses a standard cost system to collect costs related to the production of its clay bud vases. $30. During March. What was Wriphoff's variable overhead rate variance for last year? A.294 unfavorable C.070 unfavorable Cotty Clinic uses client-visits as its measure of activity. The overhead standards used at Wriphoff are as follows: The standards above were based on an expected annual volume of 40. $14. Manufacturing overhead at Wriphoff is applied to production on the basis of standard direct labor-hours.000 bud vases or 36. The actual results for last year were as follows: 25.144 unfavorable D.

$118 U B.263 U 8 . $118 F D. $1.050 U B.050 F C. The spending variance for medical supplies in March would be closest to: A. $12 F C. The activity variance for administrative expenses in March would be closest to: A. $1.263 F D. $12 U 28. $1. $1.27.

C 19. A 12. A 27. B 7. D 3. B 28.Exam 3 Spring 2010 Key Version #1 1. D 14. D 11. B 6. C 24. C 4. B 13. A 25. A 26. D 16. A 10. C 5. A 22. B 1 . D 17. C 2. D 9. D 18. C 20. B 8. A 21. A 23. B 15.

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adapted 3 1 . adapted 1 Source: CMA.Chapter Appendix.Chapter 011 7 Garrison .Chapter 010 10 Garrison .Chapter 009 8 Garrison .Exam 3 Spring 2010 Summary Category # of Questions AACSB: Analytic 22 AACSB: Reflective Thinking 6 AICPA BB: Critical Thinking 28 AICPA FN: Measurement 28 Garrison ... 8 Learning Objective: 1 8 Learning Objective: 2 5 Learning Objective: 3 5 Learning Objective: 4 7 Learning Objective: 5 2 Learning Objective: 6 4 Learning Objective: 7 1 Learning Objective: 8 1 Level: Easy 11 Level: Hard 1 Level: Medium 16 Source: CIMA.