1.Huron Company produces a commercial cleaning compound known as Zoom. The direct materials and direct labor standards for one unit of Zoom are given below: Direct materials Direct labor Standard Quantity or Standard Price Hours or Rate 6.4 pounds $ 3.00 per pound 0.4 hours $11.00 per hour Standard Cost $19.20 $ 4.40 During the most recent month, the following activity was recorded: a. Twelve thousand four hundred pounds of material were purchased at a cost of $2.90 per pound. b. The company produced only 1,240 units, using 11,160 pounds of material. (The rest of the material purchased remained in raw materials inventory.) c. Five hundred and ninety six hours of direct labor time were recorded at a total labor cost of $7,152. Required: Compute the materials price and quantity variances for the month. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations.) Direct materials price variance Direct materials quantity variance 2. SkyChefs, Inc., prepares in-flight meals for a number of major airlines. One of the company’s products is grilled salmon in dill sauce with baby new potatoes and spring vegetables. During the most recent week, the company prepared 7,200 of these meals using 3,500 direct labor-hours. The company paid these direct labor workers a total of $31,500 for this work, or $9.00 per hour. According to the standard cost card for this meal, it should require 0.50 direct labor-hours at a cost of $8.50 per hour. Required: 1. According to the standards, what direct labor cost should have been incurred to prepare 7,200 meals? How much does this differ from the actual direct labor cost? (Round labor-hours per meal and labor cost per hour to 2 decimal places.) Number of meals prepared Standard direct labor-hours per meal Total direct labor-hours allowed Standard direct labor cost per hour Total standard direct labor cost Actual cost incurred Total standard direct labor cost Total direct labor variance 2. Break down the difference computed in (1) above into a labor rate variance and a labor efficiency variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Labor rate variance Labor efficiency variance 3.Dawson Toys, Ltd., produces a toy called the Maze. The company has recently established a standard cost system to help control costs and has established the following standards for the Maze toy: Direct materials: 7 microns per toy at $0.32 per micron Direct labor: 1.5 hours per toy at $6.80 per hour During July, the company produced 4,900 Maze toys. Production data for the month on the toy follow: Direct materials: 80,000 microns were purchased at a cost of $0.30 per micron. 37,125 of these microns were still in inventory at the end of the month. Direct labor: 7,850 direct labor-hours were worked at a cost of $58,875. Required: 1. Compute the following variances for July: (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Do not round intermediate calculations. Round final answer to the nearest whole dollar.) a. The materials price and quantity variances. Material price variance Material quantity variance b. The labor rate and efficiency variances. Labor rate variance Labor efficiency variance 4.Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains warehouses that stock items carried by its dot.com clients. When a client receives an order from a customer, the order is forwarded to Logistics Solutions, which pulls the item from storage, packs it, and ships it to the customer. The company uses a predetermined variable overhead rate based on direct labor-hours. In the most recent month, 150,000 items were shipped to customers using 5,900 direct labor-hours. The company incurred a total of $18,290 in variable overhead costs. According to the company’s standards, 0.03 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $3.15 per direct labor-hour. Required: 1. According to the standards, what variable overhead cost should have been incurred to fill the orders for the 150,000 items? How much does this differ from the actual variable overhead cost? (Round labor-hours per item and overhead cost per hour to 2 decimal places.) Number of items shipped Standard direct labor-hours per item Total direct labor-hours allowed Standard variable overhead cost per hour Total standard variable overhead cost Actual variable overhead cost incurred Total standard variable overhead cost Total variable overhead variance 2. Break down the difference computed in (1) above into a variable overhead rate variance and a variable overhead efficiency variance. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).) Variable overhead rate variance Variable overhead efficiency variance 5.Purchase of poor quality materials may cause a favorable materials price variance and an unfavorable labor efficiency variance. o o True False Part 2 1. The following costs were incurred in September: Direct materials Direct labor Manufacturing overhead Selling expenses Administrative expenses $43,500 $29,100 $26,100 $18,800 $37,700 Conversion costs during the month totaled: o o o o $55,200 $69,600 $155,200 $72,600 2. A soft drink bottler incurred the following factory utility cost: $3,836 for 1,000 cases bottled and $3,900 for 1,300 cases bottled. Factory utility cost is a mixed cost containing both fixed and variable components. The variable factory utility cost per case bottled is closest to: $3.84 $0.21 $3.00 $2.95 3. The following cost data pertain to the operations of Swestka Department Stores, Inc., for the month of July. Corporate headquarters building lease Cosmetics Department sales commissions--Northridge Store Corporate legal office salaries Store manager's salary-Northridge Store Heating-Northridge Store Cosmetics Department cost of sales--Northridge Store Central warehouse lease cost Store security-Northridge Store Cosmetics Department manager's salary--Northridge Store $82,600 $5,160 $60,100 $11,300 $13,500 $31,300 $15,500 $20,400 $4,240 The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are direct costs of the Cosmetics Department? $40,700 $94,340 $36,460 $31,300 4. Erkkila Inc. reports that at an activity level of 6,700 machine-hours in a month, its total variable inspection cost is $424,130 and its total fixed inspection cost is $166,530. What would be the average fixed inspection cost per unit at an activity level of 7,000 machine-hours in a month? Assume that this level of activity is within the relevant range. $23.79 $88.16 $24.86 $38.45 5. Nikkel Corporation, a merchandising company, reported the following results for July: Sales Cost of goods sold (all variable) Total variable selling expense Total fixed selling expense Total variable administrative expense Total fixed administrative expense $413,000 $173,100 $23,000 $19,300 $17,400 $31,000 The contribution margin for July is: $362,700 $149,200 $199,500 $239,900 6. Job 593 was recently completed. The following data have been recorded on its job cost sheet: Direct materials Direct labor-hours Direct labor wage rate Machine-hours $2,491 74 labor-hours $ 20 per labor-hour 129 machine-hours The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $21 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 593 would be: $7,520 $6,680 $3,971 $4,004 7.The Assembly Department started the month with 18,500 units in its beginning work in process inventory. An additional 286,500 units were transferred in from the prior department during the month to begin processing in the Assembly Department. There were 37,250 units in the ending work in process inventory of the Assembly Department. How many units were transferred to the next processing department during the month? 305,250 267,750 305,000 342,250 8. Lasseter Corporation has provided its contribution format income statement for August. The company produces and sells a single product. Sales (4,300 units) Variable expenses $ 150,500 73,100 Contribution margin Fixed expenses Net operating income 77,400 44,600 $ 32,800 If the company sells 4,400 units, its total contribution margin should be closest to: $33,563 $77,400 $79,200 $80,900 9. Olds Inc., which produces a single product, has provided the following data for its most recent month of operations: Number of units produced Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expense 7,000 $87 $75 $5 $10 $273,000 $497,000 There were no beginning or ending inventories. The absorption costing unit product cost was: $162 per unit $206 per unit $167 per unit $287 per unit 10. Zurasky Corporation is considering two alternatives: A and B. Costs associated with the alternatives are listed below: Materials costs Processing costs Equipment rental Occupancy costs Alternative A $39,000 $45,000 $10,800 $19,400 Alternative B $50,000 $45,000 $28,400 $29,800 What is the differential cost of Alternative B over Alternative A, including all of the relevant costs? $39,000 $153,200 $114,200 $142,400 11. Bossie Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Costs: Wages and salaries Depreciation Utilities Total $285,000 243,000 170,000 $698,000 Distribution of resource consumption: Wages and salaries Depreciation Utilities Activity Cost Pools Assembly Setting up Other 55% 35% 10% 10% 20% 70% 15% 55% 30% Total 100% 100% 100% How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool? o o o o $193,883 $206,550 $383,900 $104,700 o o True False 12. The cash budget is usually prepared after the budgeted income statement. 13. Cadavieco Detailing's cost formula for its materials and supplies is $1,890 per month plus $8 per vehicle. For the month of November, the company planned for activity of 84 vehicles, but the actual level of activity was 49 vehicles. The actual materials and supplies for the month was $2,450. The materials and supplies in the planning budget for November would be closest to: o o o o $4,153 $2,450 $2,562 $2,282 14. Aide Industries is a division of a major corporation. Data concerning the most recent year appears below: Sales Net operating income Average operating assets $17,570,000 $860,930 $4,950,000 The division's return on investment (ROI) is closest to: (Round your answer to 2 decimal places.) o o o o 4.90% 17.39% 13.54% 1.90% 15. Blue Corporation's standards call for 7,800 direct labor-hours to produce 1,950 units of product. During May 1,300 units were produced and the company worked 1,850 direct laborhours. The standard hours allowed for May production would be: o o o o 7,800 hours 1,850 hours 5,200 hours 6,500 hours 16. The following standards for variable manufacturing overhead have been established for a company that makes only one product: Standard hours per unit of output Standard variable overhead rate 8.4 hours $14.80 per hour The following data pertain to operations for the last month: Actual hours Actual total variable manufacturing overhead cost Actual output 2,900 hours $43,670 250 units What is the variable overhead efficiency variance for the month? o o o o $12,590 U $11,840 U $750 F $31,080 F 17. Wyly Inc. produces and sells a single product. The selling price of the product is $185.00 per unit and its variable cost is $55.50 per unit. The fixed expense is $404,670 per month. The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.) $1,348,900 $944,230 $578,100 $404,670 18. Part O43 is used in one of Scheetz Corporation's products. The company's Accounting Department reports the following costs of producing the 16,700 units of the part that are needed every year. Direct materials Direct labor Variable overhead Supervisor's salary Depreciation of special equipment Allocated general overhead Per Unit $3.90 $4.60 $7.60 $8.30 $8.90 $5.90 An outside supplier has offered to make the part and sell it to the company for $32.00 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 $22,700 of these allocated general overhead costs would be avoided. Required: a. Prepare a report that shows the effect on the company's total net operating income of buying part O43 from the supplier rather than continuing to make it inside the company. (Input the amount as a positive value. Omit the "$" sign in your response.) Net operating income would be by $ . b Which alternative should the company choose? . o Buy Mak e 19. Activity rates from Quattrone Corporation's activity-based costing system are listed below. The company uses the activity rates to assign overhead costs to products: Activity Cost Pools Processing customer orders Assembling products Setting up batches Activity Rate $97.55 per customer order $1.54 per assembly hour $61.11 per batch Last year, Product F76D involved 7 customer orders, 449 assembly hours, and 20 batches. How much overhead cost would be assigned to Product F76D using the activity-based costing system? $2,596.51 $67,505.35 $1,222.20 $743.20 20. The Gasson Company uses the weighted-average method in its process costing system. The company's ending work in process inventory consists of 16,000 units, The ending work in process inventory is 100% complete with respect to materials and 80% complete with respect to labor and overhead. If the costs per equivalent unit for the period $3.20 for the materials and $2.30 for labor and overhead, whatis the balance of the ending work in process inventory account would be: (Do not round Cost per equivalent unit) $72,140 $80,640 $88,000 $50,700
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