Managerial Accounting Test
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acc_test_3.pdf
ACC 1820
Exam 3
Fa112015
November 9, 2015
1) Delleate Inc. has prepared the following purchases budget:
onth Budgeted Purchase
une $67,00
ul 72,5
u st 76,3
e tember 73,70
ctober 69,2
All purchases are paid for as follows: l0% in the month of purchase, 50% in the following month, and
40%two months after purchase. Calculate balance of Accounts payable at the end of October.
A) $77,680
B) $91,760
C) $69,330
D) $74,290
2) Junk Fries has budgeted sales for June and July at $680,000 and $720,000, respectively. Sales are 80%
credit, of which 70% is collected in the month of sale and 30% is collected in the following month. What is
the accounts receivable balance on July 31?
A) $200,500
B) $172,800
C) $158,200
D) $225,320
3) Dry Fruit Grocers a local grocer has budgeted inventory purchases as follows:
October: $300,000
November: $350,000
December: $390,000
Dry Fruit Grocers pays for 20% of their purchases during the month of purchase, 70%during the month
following the purchase, and the remaining 10% two months after the month of purchase. What is the
budgeted accounts payable balance on December 31?
A) $312,000
B) $347,000
C) $390,000
D) $425,000
4) A manufacturing company's budgeted income statement includes the following data:
ata extracted from budgeted
'ncome statement Mar A r May Jun
ales $120,00 $90,00 $45,J0 $100,00
Commission ex erase (15% of sales) 18,00 13,5 14,25 15,0
alaries ex erase 30,0 30,0 30,00 30,00
iscellaneous ex erase-4% of sales 4,80 3,60 3,80 4,00
ent ex erase 3,60 3,60 3,60 3,60
tili ex erase 1,90 1,90 1,90 1,90
surance ex erase 2,10 2,10 2,10 2,10
e reciation ex erase 4,40 4,40 4,40 4,40
The budget assumes that 60% of commission expenses are paid in the month they are incurred and the
remaining 40% are paid one month later. In addition, 50% of salary expenses are paid in the same month
and the remaining 50%are paid one month later. Miscellaneous expenses, rent expense and utility
expenses are assumed to be paid in the same month in which they are incurred. Insurance has been paid
in advance for the year on January 1st,
Calculate total budgeted cash payments for selling and administrative expenses for the month of April.
A) $54,200 B) $53,250
C) $54,400 D) $53,900
5) A manufacturing company's budgeted income statement includes the following data:
Data extracted from budgeted
income statement Mar A r Ma Jun
ales $120,00 $90,00 $95,00 $100,00
Commission ex ense (15% of sales) 18,0 13,50 14,25 15,0
alaries ex erase 30,0 30,00 30,00 30,00
iscellaneous ex erase-4% of sales 4,80 3,60 3,80 4,00
ent ex erase 3,60 3,60 3,60 3,60
tili ex erase 1,90 1,90 1,90 1,90
surance ex erase 2,10 2,10 2,10 2,10
e reciation ex erase 4,40 4,40 4,40 4,40
The budgefi assumes that 60% of commission expenses are paid in the month they were incurred a nd the
remaining 40%are paid one month later. In addition, 50% of salary expenses are paid in the month
incurred and the remaining 50%are paid one month later. Miscellaneous expenses, rent expense and
utility expenses are assumed to be paid in the same month in which they are incurred. Insurance was
prepaid for the year on January 1.
How much is the total of the budgeted cash payments for selling and administrative expenses for the
month of May?
A) $54,200
B) $53,250
C) $54,400
D) $53,900
6) Diemans Corp. has provided a part of its budgefi for the 2nd quarter:
A r Ma June
Cash collections $40,00 $45,00 $52,00
Cash a ments:
urchases of invento 4,50 7,20 4,50
eratin ex erases 7,90 5,60 9,00
Ca ital ex enditures 20,00 4,6U
The cash balance on April 1 is $12,000. Assume that there will be no financing transactions or costs during
the quarter. Calculate the cash balance at the end of April.
A) $50,000
B) $40,200
C) $39,600
D) $51,800
7) Diemans Corp. has provided a part of its budget for the 2nd quarter:
A r Ma June
ash collections $40,00 $45,00 $52,00_..._ Cash a ents•
urchases of invento 4,50 7,20 4,50
O eratin ex enses 7,90 5,60 9,00
a ital ex enditures 20,00 4,60
T'he cash balance on Apri11 is $12,000. Assume that there will be no financing transactions or costs during
the quarter. Calculate the cash balance at the end of May.
A) $51,800
B) $40,800
C) $33,900
D) $21,800
8) Diemans Corp .has provided a part of its budget for the 2nd quarter:
A r Ma June
ash collections $40,00 $45,00 $52,00
Cash a ents:
urchases of invento 4,50 7,20 4,50
O eratin ex enses 7,90 5,60 9,00
Ca ital ex enditures 20,00 4,60
T'he cash balance on Apri11 is $12,000. Assume that there will be no financing transactions or costs during
the quarter. Calculate the cash balance at the end of June.
A) $26,500
B) $40,800
C) $85,700
D) $21,800
9) Nobell Inc. has a cash balance of $20,000 on April 1, 2015. They are now preparing the cash budget for
the second quarter. Budgeted cash collections and payments are as follows:
A r Ma June
ash collections $25,00 $22,00 $20,00
ash a ments:
urchases of invento 5,80 7,00 6,20
O eratin ex enses 3,50 4,60 5,30
There are no budgeted capital expenditures,or financing transactions during the quarter. Based on the
above data, calculate the projected cash balance at the end of April.
A) $22,000
B) $35,700
C) $23,700 D) $22,400
10) Nobell Inc. has a cash balance of $20,000 on Apri11, 2015. They are now preparing the cash budget for
the second quarter. Budgeted cash collections and payments are as follows:
A r May June
Cash collections $25,00 $22,00 $20,00
ash a ments:
urchases of invento 5,80 7,00 6,20
O eratin ex enses 3,50 4,60 5,30
There are no budgeted capital expenditures or financing transactions during the quarter. Based on the
above data, calculate the projected cash balance at the end of May.
A) $22,000
B) $21,900
C) $23,700 D) $46,100
11) Nobell Inc. has a cash balance of $20,000 on April 1, 2015. They are now preparing the cash budget for
the second quarter. Budgeted cash collections and payments are as follows:
A r Ma June
ash collections $25,00 $22,00 $20,00
Cash a ments•
urchases of inventor 5,80 7,00 6,20
O eratin ex erases 3,50 4,60 5,30
There are no budgeted capital expenditures or financing transactions during the quarter. Based on the
above data, calculate the projected cash balance at the end of June.
A) $35,700
B) $21,900
C) $46,100
D) $54,600
12) Fulkron Manufacturing provides the following data excerpted from its 3rd quarter budget:
Jul Au Se
ash collections $66,00 $42,00 $45,00
Cash a ents:
urchases of invento 50,00 48,0 25,00
O eratin ex erases 10,0 15,0 20,00
a ital ex enditures 32,0 6,00
The cash balance on June 30 is projected to be $10,000. Based on the above data, calculate the shortfall the
company is projected to have at the end of August.
A) $32,000
B) $43,000
C) $37,000
D) $16,000
13) Fulkron Manufacturing provides the following data excerpted from its 3rd quarter budget:
jul Au Sep
Cash collections $66,00 $42,00 $45,00
Cash a ents•
urchases of invento 50,00 48,0 25,0
O eratin ex erases 10,00 15,0 20,00
Ca ital e enditures 32,00 6,00
The cash balance on June 30 is projected to be $10,000. Based on the above data, calculate the shortfall the
company is projected to have at the end of September.
A) $43,000
B) $28,000
C) $35,000 D) $40,000
14) A3+has prepared its 3rd quarter budget and provided the following data:
jul Aug Se
ash collections $50,00 $40,00 $48,00
ash a ents:
urchases of inventor 31,00 22,00 18,00
eratin ex erases 12,00 9,00 11,60
Ca ital ex enditures 13,00 25,00
T'he cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash
balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may
borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing
transactions are assumed to take place at the end of the month. The loan balance should be repaid in
increments of $5,000 whenever there is surplus cash.
How much will the company have to borrow at the end of July?
A) $0 B) $5,000
C) $15,000
D) $10,000
15) A3+has prepared its 3rd quarter budget and provided the following data:
jul Au Se
ash collections $50,00 $40,00 $48,00
Cash a ments:
urchases of inventor 31,0 22,00 18,00
eratin ex enses 12,0 9,00 11,60
a ital ex enditures 13,00 25,0
The cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash
balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may
borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing
transactions are assumed to take place at the end of the month. The loan balance should be repaid in
increments of $5,000 whenever there is surplus cash.
How much will the company have to borrow at the end of August?
A) $15,000
B) $5,000
C) $10,000
D) $20,000
16) A3+has prepared its 3rd quarter budget and provided the following data:
rul Au Sep
ash collections $50,~ $40,00 $48,00
ash a ments:
urchases of inventor 31,0 22,00 18,00
O eratin ex enses 12,00 9,00 11,60
Ca ital ex enditures 13,00 25,00
The cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash
balance of $5,000 and is authorized to borrow at the end of each month to makeup any shortfalls. It may
borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing
transactions are assumed to take place at the end of the month. The loan balance should be repaid in
increments of $5,000 whenever there is surplus cash. Calculate the ending cash balance before financing
for August.
A) $9,000
B) $5,000
C) $3,000
D) ($8,000)
17) A3+has prepared its 3rd quarter budget and provided the following data:
jul Au Se
Cash collections $50,00 $40,00 $48,00
Cash a ments:
urchases of invento 31,00 22,00 18,00
O eratin ex erases 12,0 9,00 11,60
a ital ex enditures 13,0 25,0
The cash balance on June 30 is projected to be $4,000. T'he company has to maintain a minimum cash
balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may
borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing
transactions are assumed to take place at the end of the month. T'he loan balance should be repaid in
increments of $5,000 whenever there is surplus cash. Calculate the final cash balance at the end of August
taking into consideration all the financing transactions.
A) $6,958
B) $5,254
C) $7,100
D) $4,320
18) A3+has prepared its 3rd quarter budget and provided the following data:
jul Au Se
ash collections $50,00 $40,00 $48,00
Cash a ments:
urchases of invento 31,0 22,00 18,0
O eratin ex erases 1~,0 9,00 11,60
a ital ex enditures 13,00 25,0
The cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash
balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may
borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing
transactions are assumed to take place at the end of the month. The loan balance should be repaid in
increments of $5,000 whenever there is surplus cash. Calculate the amount of principal repayment at the
end of September.
A) $5,000
B) $10,000
C) $15,000
D) $20,000
19) A3+has prepared its 3rd quarter budget and provided the following data:
jul Au Se
Cash collections $50,00 $40,00 $48,00
ash a ments:
urchases of inventor 31,00 22,00 18,00
O eratin ex enses 12,0 9,00 11,60
Ca ital e enditures 13,00 25,00
The cash balance on June 30 is projected to be $4,000. T'he company has to maintain a minimum cash
balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may
borrow in increments of $5,000 and has to pay interest every month at an annual rate of 5%. All financing
transactions are assumed to take place at the end of the month. The loan balance should be repaid in
increments of $5,000 whenever there is surplus cash. Calculate the final projected cash balance at the end
of September.
A) $6,000 B) $5,254 C) $6,133
D) $7,200
20) June sales were $40,000 while projected sales for July and August were $50,000 and $60,000,
respectively. Sales are 40% cash and 60% credit. All credit sales are collected in the month following the
sale. Calculate expected collections for July.
A) $36,000
B) $44,000
C) $50,000 D) $54,000
21) Purchases for May were $100,000, while expected purchases for June and July are $110,000 and
$125,000, respectively. All purchases are paid 25% in the month of purchase and 75%the following
month. Calculate the budgeted payments for the month of June.
A) $102,500
B) $107,500 C) $110,000
D) $121,250
22) Farmerlands Enterprises has budgeted sales for the months of September and October at $300,000 and
$280,000, respectively. Monthly sales are 80% credi# and 20% cash. Of the credit sales, 50°/o are collected in
the month of sale and 50% are collected in the following month. Calculate cash collections for the month
of October.
A) $168,000
B) $232,000 C) $288,000
D) $290,000
23) The following details have been extracted from the budget of a merchandiser.
ent Ex ense 8,000 er month
e reciation Ex ense 3,500 er month
surance Ex ense 1,250 er month
iscellaneous Ex ense % of sales, aid as incurred
ommissions Ex ense 10% of sales
alaries Ex ense 7,000 er month
ec Jan Feb March
ales $45,00 $50,000 $65,000 $80,000
Commission and salaries expenses are paid 50% in the month to which they relate and the balance in the
next month.
Rent and miscell~x►eous expenses are paid as and when they occur. Insurance is prepaid at the beginning
of the quarter. Calculate cash payments for the selling and administrative expenses for the first quarter of
the next year.
A) $70,400
B) $50,500
C) $75,000
D) $62,750
24) Uncle's Caps, a merchandiser, has provided the following budgeted amounts for the next budget
period.
alance of cash at the be innin $30,00
ash collections 680,00
a ents for:
urchase of invento 350,00
ellin and administrative ex enses 70,40
a ital ex enditures 89,00
A minimum cash balance of $250,000 is required to be maintained. The company can borrow in
increments of $10,000 as and when required. Assume the company can borrow the needed funds at the
end of the period. Calculate the ending cash balance for the budget period.
A) $320,300
B) $250,600
C) $300,000
D) $540,230
25) Kevin Company prepared the following static budget for the year 2015:
Static Bud et
nits/volume 5,00
Per Unit
ales revenue $3.00 $15,00
ariable ex enses $1.50 7 5
Contribution mar in 7,50
fixed ex enses 4 00
O eratin income/(loss)
If a flexible budget was prepared at a volume of 6,000, calculate the amount of operating income.
A) $5,000
B) $3,500 C) $9,000 D) $4,000
26) Kevin Company prepared the following static budget for the year 2015:
Static Bud et
nits/volume 5,00
Per Unit
ales revenue $3.00 $15,00
ariable ex enses $1.50 7,50
Contribution mar in 7,50
fixed ex enses 4,00
O eratin income/(loss) $3,50
If a flexible budget was prepared at a volume of 7,000, calculate the amount of operating income.
A) $3,500
B) $10,500 C) $6,500
D) $4,000
27) Ibis Company prepared the following static budget for the month of November, 2015:
Static Bud et
nits/volume 12,00
Per Unit
ales revenue 20 240 0
ariable ex enses ~8 -96 00
Contribution mar in 144,00
ixed ex 'enses -130 00
eratin income/(loss) 4
If a flexible budget was prepared at a volume of 13,000 units, calculate the operating income at 13,000
units of production.
A) $22,000
B) $17,500
C) $14,000
D) $26,000
28) Onyx Company has prepared a static budget at the beginning of the month. At the end of the month,
the following information has been retrieved from the records.
Static budget:
Sales volume: 1,000 units: Price: $70 per unit
Variable expense: $32 per unit: Fixed expenses: $37,500 per month
Operating income: $500
Actual results:
Sales volume: 990 units: Price: $74 per unit
Variable expense: $35 per unit: Fixed expenses: $33,000 per month
Operating income: $5,610
Calculate the flexible budget variance for Sales Revenue.
A) $5,490 U
B) $5,490 F
C) $3,960 U
D) $3,960 F
29) Onyx Company has prepared a static budget at the beginning of the month. At the end of the month,
the following information has been retrieved from the records.
Static buds
Sales volume: 2,000 units: Price: $50 per unit
Variable expense: $12 per unit: Fixed expenses: $25,000 per month
Operating income: $51,000
Actual results:
Sales volume: 1,800 units: Price: $58 per unit
Variable expense: $16 per unit: Fixed expenses: $35,000 per month
Operating income: $40,600
Calculate the flexible budget variance for variable expenses.
A) $5,490 U
B) $2,970 U
C) $7,200 U D) $3,960 F
30) Onyx Company has prepared a static budget at the beginning of the month. At the end of the month,
the following information has been retrieved from the records.
Static buds
Sales volume: 1,000 units: Price: $70 per unit
Variable expense: $32 per unit: Fixed expenses: $37,500 per month
Operating income: $500
Actual results:
Sales volume: 990 units: Price: $74 per unit
Variable expense: $35 per unit: Fixed expenses: $33,000 per month
Operating income: $5,610
Calculate the flexible budget variance for fixed expenses.
A) $4,500 U
B) $4,500 F
C) $0 D) $5,490 F
31) Onyx Company has prepared a static budget at the beginning of the month. At the end of the month,
following information has been retrieved from the records.
Static budget:
Sales volume: 2,000 units: Price: $50 per unit
Variable expense: $12 per unit: Fixed expenses: $25,000 per month
Operating income: $51,000
Actual results:
Sales volume: 1,800 units: Price: $58 per unit
Variable expense: $16 per unit: Fixed expenses: $35,000 per month
Operating income: $40,600
Calculate the flexible budget variance for operating income.
A) $4,500 U
B) $7,600 U
C) $2,800 U
D) $5,490 F
32) Onyx Company has prepared a static budget at the beginning of the month. At the end of the month,
the following information has been retrieved from the records.
Static budget:
Sales volume: 1,000 units: Price: $70 per unit
Variable expense: $32 per unit: Fixed expenses: $37,500 per month
Operating income: $500
Actual results:
Sales volume: 990 units: Price: $74 per unit
Variable expense: $35 per unit: Fixed expenses: $33,000 per month
Operating income: $5,610
Calculate the sales volume variance for revenues.
A) $4,500 U
B) $700 U C) $380 U D) $3,960 F
33) Onyx Company has prepared a static budget at the beginning of the month. At the end of the month,
the following information has been retrieved from the records.
Static budget:
Sales volume: 2,000 units: Price: $50 per unit
Variable expense: $12 per unit: Fixed expenses: $25,000 per month
Operating income: $51,000
Actual results:
Sales volume: 1,800 units: Price: $58 per unit
Variable expense: $16 per unit: Fixed expenses: $35,000 per month
Operating income: $40,600
Calculate the sales volume variance for variable expenses.
A) $2,970 U B) $2,400 F
C) $3,800 U D) $3,960 F
34) Onyx Company has prepared a static budget at the beginning of the month. At the end of the month,
the following information has been retrieved from the records.
Sfiatic budget:
Sales volume: 1,000 units: Price: $70 per unit
Variable expense: $32 per unit: Fixed expenses: $37,500 per month
Operating income: $500
Actual results:
Sales volume: 990 units: Price: $74 per unit
Variable expense: $35 pex unit: Fixed expenses: $33,000 per month
Operating income: $5,610
Calculate the sales volume variance for fixed expenses.
A) $2,970 U
B) $4,500 F C) $380 U D) $0
35) Onyx Company has prepared a static budget at the beginning of the month. At the end of the month,
the following information has been retrieved from the records.
Static budget:
Sales volume: 2,000 units: Price: $50 per unit
Variable expense: $12 per unit: Fixed expenses: $25,000 per month
Operating income: $51,000
Actual results:
Sales volume: 1,800 units: Price: $58 per unit
Variable expense: $16 per unit: Fixed expenses: $35,000 per month
Operating income: $40,600
Calculate the sales volume variance for operating income.
A) $2,970 U B) $5,490 F
C) $7,600 U D) $5,110 F
36) The Carolina Products Company has completed the flexible budget analysis for the 2nd quarter,
which is as given below.
Actual
Results
Flexible
Budget
Variance
Fleacible
Bud et
Sales
Volume
Variance
Static
Bud et
nits/Volume 12 8 12 80 80 12 0
ales Revenue $62,72 $1,28 $64,00 $4,00 F $60,00
ariable Ex enses 27 52 64 26 88 168 25 20
ontribution Mar in $35,20 $1,92 $37,12 $2,32 $34,80
fixed Ex enses 341 10 34 00 34 0
O eratin Income/(loss) 1 1 2 02 312 2 32 80
Which of the following would be a correct interpretation of the sales volume variance for sales revenues?
A) increase in price per unit
B) increase in sales volume
C) increase in variable expense per unit
D) increase in fixed costs
37) T'he Carolina Products Company has completed the flexible budget analysis for the 2nd quarter,
which is as given below.
Actual
Results
Flexible
Budget
Variance
Flexible
Bud et
Sales
Volume
Variance
Static
Bud et
nits/Volume 12 8 12 8 80 12 0
ales Revenue $62,72 $1,28 $64,00 $4,00 $60,00
ariable Ex enses 27 52 64 26 88 168 25 2
Contribution Mar in $35,20 $1,92 $37,12 $2,32 $34,80
fixed Ex enses 3410 10 34 00 34 00
eratin Income/(loss) 1 10 2 02 312 2 32 80
Which of the following would be a correct interpretation of the sales volume variance for variable
expenses?
A) decrease in price per unit
B) increase in variable cost per unit
C) increase in sales volume
D) increase in fixed costs
38) The Carolina Products Company has completed the flexible budget analysis for the 2nd quarter,
which is as given below.
Actual
Results
Flexible
Budget
Variance
Flexible
Bud et
Sales
Volume
Variance
Static
Bud et
nits/Volume 12 8 12 8 80 12 00
ales Revenue $62,72 $1,28 $64,00 $4,00 $60,00
ariable Ex enses 27 52 64 26 88 1 68 25 20
Contribution Mar in $35,20 $1,92 $37,12 $2,32 F $34,80
fixed Ex enses 3410 10 34 00 34 00
eratin Income/(loss) 1 10 2 02 312 2 32 80
Which of the following statements would be a correct interpretation of the sales volume variance for
operating income?
A) decrease in price per unit.
B) increase in variable cost per unit
C) increase in sales volume
D) increase in fixed costs
39) The Carolina Products Company has completed the flexible budget analysis for the 2nd quarter,
which is as given below.
Actual
Results
Flexible
Budget
Variance
Flexible
Bud et
Sales
Volume
Variance
Static
Bud et
nits/Volume 12 8 12 80 80 12 00
ales Revenue $62,72 $1,28 $64,00 $4,00 $60,00
ariable Ex enses 27 52 64 26 88 168 25 20
Contribution Mar in $35,20 $1,92 $37,12 $2,32 F $34,80
fixed Ex enses 3410 10 34 00 34 00
O eratin Income/(loss) 1 1 2 02 312 2 32 80
Which of the following statements would be a correct interpretation of the Flexible budget variance for
sales revenue?
A) decrease in price per unit
B) increase invariable cost per unit
C) increase in sales volume
D) increase in fixed costs
40)1'he Carolina Products Company has completed the flexible budget analysis for the 2nd quarter,
which is as given below.
Actual
Results
Flexible
Budget
Variance
Flexible
Bud et
Sales
Volume
Variance
Static
Bud et
nits/Volume 12 80 12 8 80 12 0
ales Revenue $62,72 $1,28 $64,00 $4,00 F $60,00
ariable Ex enses 27 52 64 26 8 1 68 25 20
Contribution Mar in $35,20 $1,92 $37,12 $2,32 $34,80
fixed Ex enses 341 10 34 0 34 00
O eratin Income/(loss 1 10 2 02 312 2 32 80
Which of the following statements would be a correct interpretation of the flexible budget variance for
variable expenses?
A) decrease in price per unit
B) increase in variable cost per unit
C) increase in sales volume
D) increase in fixed costs
41) T'he Carolina Products Company has completed the flexible budget analysis for the 2nd quarter,
which is as given below.
Actual
Results
Flexible
Budget
Variance
Fle~cible
Bud et
Sales
Volume
Variance
Static
Bud et
nits/Volume 12 8 12 8 80 12 0
ales Revenue $62,72 $1,28 $64,00 $4,00 F $60,00
ariable Ex enses 27 52 64 26 88 1 68 25 2
ontribution Mar in $35,20 $1,92 $37,12 $2,32 $34,80
fixed Ex enses 341 10 34 Q 34 00
eratin Income/(loss) 1 10 2 02 312 2 32 80
Which of the following statements would be a correct interpretation of the flexible budget variance for
fixed expenses?
A) decrease in price per unit
B) increase in variable cost per unit
C) increase in sales volume
D) increase in fixed costs
42) A company is analyzing its month-end results by comparing it to both static and flexible budgets.
During the previous month, the actual selling price was higher than the expected price as per the static
budget. This difference results in a(n):
A) favorable flexible budget variance for sales revenues.
B) favorable sales volume variance for sales revenues.
C) unfavorable flexible budget variance for sales revenues.
D) unfavorable sales volume variance for sales revenues.
43) Western Outfitters projected sales of 75,000 units for the year 2015 at a unit sale price of $12.00. Actual
sales in 2015 was 72,000 units, at $14.00 per unit. Variable costs were budgeted at $4.00 per unit; actual
variable cost was $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted
to $400,000. What is the flexible budget variance for operating income?
A) $48,000 unfavorable
B) $65,000 favorable
C) $65,000 unfavorable
D) $41,000 favorable
44) Western Chitfitters projected sales of 75,000 units for the year 2Gi5 at a unit sale price or" $12.00. Actuai
sales in 2015: 72,000 units, at $14.00 per unit. Variable costs were budgeted at $4.00 per unit; actual
variable cost was $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted
to $400,000. What is the sales volume variance for operating income?
A) $41,000 unfavorable
B) $24,000 unfavorable
C) $24,000 favorable
D) $65,000 unfavorable
45) Mountain Sports Equipment Company projected sales of 78,OW units at a unit sale price of $12 for the
year 2015. Actual sales of 2015 were 75,000 units at $14 per unit. Variable costs were budgeted at $3 per
unit; actual amount was $4 per unit. Budgeted fixed costs totaled $375,000, while actual fixed costs
amounted to $400,000. What is the flexible budget variance for variable expenses?
A) $78,000 unfavorable
B) $75,000 unfavorable
C) $75,000 favorable
D) $78,000 favorable
46) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require
highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible
budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular
products were as follows:
Direct materials: 3 pounds per unit; $4 per pound
Direct labor: 4 hours per unit; $20 per hour
Emerald produced 5,000 units during the quarter. At the end of the quarter, an examination of the labor
costs records showed that the company used 25,000 direct labor hours and actual total direct labor costs
were $375,000. Calculate the direct labor cost variance.
A) $125,000 Favorable
B) $300,000 Favorable
C) $300,000 Unfavorable
D) $125,000 Unfavorable
47) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require
highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible
budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular
products were as follows:
Direct materials: 3 pounds per unit; $4 per pound
Direct labor: 4 hours per unit; $15 per hour
Emerald produced 5,000 units during the quarter. At the end of the quarter, an examination of the labor
costs records showed that the company used 25,000 direct labor hours and actual total direct labor costs
were $375,000. How much is the direct labor efficiency variance?
A) $75,000 U
B) $75,000 F
C) $300,000 F
D) $300,000 U
48) Faas Marine Stores Company manufactures decorative fittings for luxury yachts that require highly
skilled labor, and special metallic materials. Faas uses standard costs to prepare its flexible budget. For
the first quarter of 2011, direct material and direct labor standards for one of their popular products were
as follows:
Materials: l.5 pounds per unit; $4.00 per pound
Labor: 2.0 hours per unit; $18.00 per hour
During the first quarter, Faas produced 5,000 units of this product. At the end of the quarter, an
examination of the materials records showed that the company used 7,000 pounds of materials and the
direct materials cost variance was $1,750 U. Which of the following would be a logical explanation for this
variance? A) The company used more labor hours than allowed by the standards.
B) The company paid a higher rate for labor than allowed by the standards.
C) T'he company used greater quantity of materials than allowed by the standards.
D) The company paid a higher price for the materials than allowed by the standards.
49) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require
highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible
budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular
products were as follows:
Direct materials: 3 pounds per unit; $4 per pound
Direct labor: 4 hours per unit; $15 per hour
Emerald produced 5,000 units during the quarter. At the end of the quarter, an examination of the labor
costs records showed that the direct labor cost variance was $75,000 F. Which of the following would be a
logical explanation for this variance?
A) The company used fewer labor hours than allowed by the standards.
B) T'he company paid a lower rate for labor than allowed by the standards.
C) The company used a lower quantity of materials than allowed by the standards.
D) T'he company paid a lower price for the materials than allowed by the standards.
50) From the following particulars of Rose Mary Company, calculate the total production cost flexible
budget variance.
Total Producrion Cost Fielcible Budget Variance
(QI Total DirectMaterials
Variance Total Direct Labor Variance Total Manufacturing Overhead Variance (h) (c) {d)
Direct Direct Birect Materials Materials Direct Labor Labor Totat Variable Total Fixed Cost Efficiency Efficiency
Variance Variance Cost Variance Variance Overhead Variance Overhead Variance
X300 F 5150 U $450 U $S00 F (e) {f} Variable Overhead Variable Overhead Faced Overhead Cost
Variance Efficiency Variance Cast Variance 3350 U 5425 F $650 F
A) $925 F
B) $450 U
C) $725 F
D) $725 U
