. Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer. 1. Loggin Midwifery’s cost formula for its wages and salaries is $2,380 per month plus $231 per birth. For the month of April, the company planned for activity of 100 births, but the actual level of activity was 102 births. The actual wages and salaries for the month was $25,510. What would the spending variance for wages and salaries in April be closest to? A. $30 F B. $432 U C. $432 F D. $30 U 2. For which cost(s) is a volume variance computed? A. Direct labor costs as well as overhead costs B. Fixed manufacturing overhead only C. Both variable and fixed manufacturing overhead D. Variable manufacturing overhead only 3. Marusarz Corporation has provided the following data concerning its most important raw material, compound F55M: When recording the purchase of materials, what would Raw Materials be? A. Credited for $74,120 B. Credited for $73,270 C. Debited for $74,120 D. Debited for $73,270 4. Krejci Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $41,430 per month plus $2,419 per flight plus $6 per passenger. The company expected its activity in March to be 84 flights and 222 passengers, but the actual activity was 81 flights and 220 passengers. The actual cost for plane operating costs in March was $239,870. What would the plane operating costs in the planning budget for March be closest to? A. $248,754 B. $245,958 C. $238,689 D. $239,870 5. Brletich Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below: What was the delivery cycle time? A. 22.5 hours B. 21.1 hours C. 3.7 hours D. 9.1 hours 6. Ok Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below: What was the manufacturing cycle efficiency (MCE) closest to? A. 0.12 B. 0.47 C. 0.02 D. 0.07 7. Compound B73G is used to make Vasconcellos Corporation’s major product. The standard cost of B73G is $27.60 per ounce and the standard quantity is 8.6 ounces per unit of output. In the most recent month, 3,200 ounces of the raw material were purchased at a cost of $26.70 per ounce. When recording the purchase of materials, what would Raw Materials be? A. Debited for $85,440 B. Credited for $85,440 C. Debited for $88,320 D. Credited for $88,320 8. Hoang Corporation makes three products that use compound W, the current constrained resource. Data concerning those products appear below: Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. A. RP,KI,LH B. RP,LH,KI C. LH,RP,KI D. KI,RP,LH 9. Hoppy Corporation compares monthly operating results to a static budget prepared at the beginning of the month. When the actual level of activity is less than budgeted, which of the following would be true? A. Fixed costs would show favorable variances. B. Fixed costs would show unfavorable variances. C. Variable costs would show unfavorable variances. D. Variable costs would show favorable variances. 10. Pettry Snow Removal’s cost formula for its vehicle operating cost is $2,170 per month plus $408 per snow day. For the month of December, the company planned for activity of 16 snow days, but the actual level of activity was 13 snow days. The actual vehicle operating cost for the month was $7,600. What would the vehicle operating cost in the planning budget for December be closest to? A. $7,474 B. $7,600 C. $8,698 D. $9,354 11. A study has been conducted to determine if one of the departments in Barry Corporation should be discontinued. The contribution margin in the department is $60,000 per year. Fixed expenses charged to the department are $75,000 per year. It is estimated that $34,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, what would happen to the company’s overall net operating income? A. Decrease by $26,000 per year B. Decrease by $15,000 per year C. Increase by $26,000 per year D. Increase by $15,000 per year 12. Part S00 is used in one of Morsey Corporation’s products. The company makes 6,000 units of this part each year. The company’s Accounting Department reports the following costs of producing the part at this level of activity: An outside supplier has offered to produce this part and sell it to the company for $16.10 each. If this offer is accepted, the supervisor’s salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company. If the outside supplier’s offer were accepted, only $6,000 of these allocated general overhead costs would be avoided. If management decides to buy part S00 from the outside supplier rather than to continue making the part, what would be the annual impact on the company’s overall net operating income? A. Net operating income would decrease by $65,400 per year. B. Net operating income would decrease by $3,000 per year. C. Net operating income would decrease by $77,400 per year. D. Net operating income would decrease by $71,400 per year. 13. The following standards for variable manufacturing overhead have been established for a company that makes only one product: The following data pertain to operations for the last month: What is the variable overhead efficiency variance for the month? A. $16,817 U B. $17,085 U C. $17,397 U D. $312 F 14. Towne Snow Removal’s cost formula for its vehicle operating cost is $1,470 per month plus $399 per snow day. For the month of November, the company planned for activity of 13 snow days, but the actual level of activity was 9 snow days. The actual vehicle operating cost for the month was $5,230. What would the vehicle operating cost in the flexible budget for November be closest to? A. $5,061 B. $5,230 C. $4,609 D. $6,657 15. Product Q77H has been considered a drag on profits at Zenke Corporation for some time and management is considering discontinuing the product altogether. Data from the company’s accounting system appear below: In the company’s accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $71,000 of the fixed manufacturing expenses and $43,000 of the fixed selling and administrative expenses are avoidable if product Q77H is discontinued. What would be the effect on the company’s overall net operating income if product Q77H were dropped? A. Overall net operating income would decrease by $95,000. B. Overall net operating income would increase by $95,000. C. Overall net operating income would increase by $4,000. D. Overall net operating income would decrease by $4,000. 16. Wexell Framing’s cost formula for its supplies cost is $1,230 per month plus $10 per frame. For the month of October, the company planned for activity of 592 frames, but the actual level of activity was 597 frames. The actual supplies cost for the month was $7,050. What would the activity variance for supplies cost in October be closest to? A. $50 U B. $50 F C. $100 F D. $100 U 17. Fahringer Corporation makes three products that use compound W, the current constrained resource. Data concerning those products appear below: Rank the products in order of their current profitability from most profitable to least profitable. In other words, rank the products in the order in which they should be emphasized. A. QR,XS,BJ B. XS,BJ,QR C. BJ,QR,XS D. QR,BJ,XS 18. Cybil Baunt just inherited a 1958 Chevy Impala from her late Aunt Joop. Aunt Joop purchased the car 40 years ago for $6,000. Cybil is either going to sell the car for $8,000 or have it restored and sell it for $22,000. The restoration will cost $6,000. Cybil would be better off spending A. $10,000 to have the vehicle restored. B. $8,000 to have the vehicle restored. C. $2,000 to have the vehicle restored. D. $6,000 to have the vehicle restored. 19. Hairr Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $9.50 per machine-hour and fixed manufacturing overhead cost of $947,672 per period. If the denominator level of activity is 8,900 machine-hours, what would the predetermined overhead rate be? A. $950.00 B. $115.98 C. $9.50 D. $106.48 20. Diseth Corporation applies manufacturing overhead to products on the basis of standard machinehours. The company bases its predetermined overhead rate on 5,300 machine-hours. The company’s total budgeted fixed manufacturing overhead is $12,720. In the most recent month, the total actual fixed manufacturing overhead was $12,370. The company actually worked 5,350 machine-hours during the month. The standard hours allowed for the actual output of the month totaled 5,540 machine-hours. What was the overall fixed manufacturing overhead volume variance for the month? A. $576 Favorable B. $120 Unfavorable C. $350 Favorable D. $120 Favorable End of exam
