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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.

1. The budgeted cash disbursements for November are

A. $530,000.

B. $375,000.

C. $405,000.

D. $345,000.

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

Variable overhead                  0.1 hours                             $0.40

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

• Variable overhead incurred: $1,475

• Inventory of direct materials on January 31: 3,000 pounds

2. The total variance (both rate and efficiency) for variable overhead for January is

A. $85 F.

B. $40 F.

C. $100 U.

D. $125 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. 9.5

C. 9.2

D. 10.2

4. Which of the following will not result in an increase in return on investment (ROI), assuming other

factors remain the same?

A. A reduction in expenses

B. An increase in sales

C. An increase in operating assets

D. An increase in net operating income

5. 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. $11.83.

D. $7.00.

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

Administrative expenses                 3,700                                          0.40

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

Administrative expenses              $4,772

6. The activity variance for net operating income in January would be closest to

A. $489 F.

B. $489 U.

C. $2,019 U.

D. $2,019 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                      20 pounds                             $8.00

Direct labor                              0.1 hours                             $1.10

Variable overhead                  0.1 hours                             $0.40

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

• Variable overhead incurred: $1,475

• Inventory of direct materials on January 31: 3,000 pounds

7. The materials price variance for January is

A. $1,640 U.

B. $1,640 F.

C. $1,300 U.

D. $1,700 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:

                                                      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

Administrative expenses                 3,700                                          0.40

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

Administrative expenses              $4,772

8. The activity variance for administrative expenses in January would be closest to

A. $8 F.

B. $8 U.

C. $12 U.

D. $12 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

Administrative expenses                 3,000                                          0.10

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

Administrative expenses              $3,239

9. The activity variance for personnel expenses in December would be closest to

A. $71 F

B. $2,361 U.

C. $2,361 F.

D. $71 U.

10. Manufacturing Cycle Efficiency (MCE) is computed as

A. Value-Added Time divided by Delivery Cycle Time.

B. Process Time divided by Delivery Cycle Time.

C. Throughput Time divided by Delivery Cycle Time.

D. Value-Added Time divided by Throughput Time.

11. 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. $24.00

B. $21.40

C. $16.00

D. $17.60

12. 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. $462,000.

B. $234,150.

C. $117,075.

D. $455,700.

13. The budget or schedule that provides necessary input data for the direct-labor budget is the

A. production budget.

B. schedule of cash collections.

C. cash budget.

D. raw materials purchases budget.

14. Super Drive is a computer hard-drive manufacturer. The company's balance sheet for the fiscal year

ended on November 30 appears below:

                                                            Super Drive, Inc.

                                                  Statement of Financial Position

                                                 For the year ended November 30

Assets:

Cash                                                                           $52,000

Accounts receivable                                                   150,000

Inventory                                                                     315,000

Property, plant, and equipment                               1,000,000

Total Assets                                                          $1,517,000

Liabilities and stockholders' equity:

Accounts payable                                                     $175,000

Common stock                                                           900,000

Retained earnings                                                      442,000

Total liabilities and

stockholders' equity                                               $1,517,000

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 sold.

• 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. $520,000.

B. $462,000.

C. $402,000.

D. $208,000.

15. 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. ($600)

B. $600

C. $450

D. ($450)

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

Administrative expenses                 3,000                                          0.10

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

Administrative expenses              $3,239

16. The revenue variance for December would be closest to

A. $3,429 U.

B. $3,429 F.

C. $3,680 U.

D. $3,680 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                      20 pounds                             $8.00

Direct labor                              0.1 hours                             $1.10

Variable overhead                  0.1 hours                             $0.40

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

• Variable overhead incurred: $1,475

• Inventory of direct materials on January 31: 3,000 pounds

17. The materials quantity variance for January is

A. $750 F.

B. $800 U.

C. $300 U.

D. $300 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                      20 pounds                             $8.00

Direct labor                              0.1 hours                             $1.10

Variable overhead                  0.1 hours                             $0.40

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

• Variable overhead incurred: $1,475

• Inventory of direct materials on January 31: 3,000 pounds

18. The labor rate variance for January is

A. $585 F.

B. $475 U.

C. $475 F.

D. $585 U.

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.

19. The budgeted net income for November is

A. $50,000.

B. $68,000.

C. $75,000.

D. $135,000.

20. 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. $70,000.

B. $45,000.

C. $85,000.

D. $40,000.