managerial accounting hw2

1.The manufacturing overhead budget at Mahapatra Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 9,000 direct labor-hours will be required in May. The variable overhead rate is $8.90 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $116,100 per month, which includes depreciation of $18,260. All other fixed manufacturing overhead costs represent current cash flows.The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

$97,840

$80,100

$196,200

$177,940

2.

Sartain Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.

Beginning Inventory Ending InventoryFinished goods (units) 32,000 82,000 Raw material (grams) 62,000 52,000 Each unit of finished goods requires 2 grams of raw material.If the company plans to sell 790,000 units during the year, how much of the raw material should the company purchase during the year?

1,670,000 grams

1,702,000 grams

1,732,000 grams

1,680,000 grams

3.

The manufacturing overhead budget at Cutchin Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 3,500 direct labor-hours will be required in September. The variable overhead rate is $7 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,190 per month, which includes depreciation of $3,570. All other fixed manufacturing overhead costs represent current cash flows. The September cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

$39,620

$67,690

$64,120

$24,500

4.The manufacturing overhead budget at Mahapatra Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 9,000 direct labor-hours will be required in May. The variable overhead rate is $8.90 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $116,100 per month, which includes depreciation of $18,260. All other fixed manufacturing overhead costs represent current cash flows.The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for May should be:

$21.80

$19.50

$8.90

$12.90

5.Walsh Company expects sales of Product W to be 68,000 units in April, 83,000 units in May and 78,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 20% of the next month's expected unit sales. Due to excessive production during March, on March 31 there were 33,000 units of Product W in the ending inventory. Given this information, Walsh Company's production of Product W for the month of April should be:

51,600 units

83,000 units

68,000 units

33,520 units

6.Sartain Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year.

Beginning Inventory Ending InventoryFinished goods (units) 30,000 80,000 Raw material (grams) 60,000 50,000 Each unit of finished goods requires 3 grams of raw material.If the company plans to sell 770,000 units during the year, the number of units it would have to manufacture during the year would be:

850,000 units

770,000 units

710,000 units

820,000 units

7.Avril Company makes collections on sales according to the following schedule:

50% in the month of sale45% in the month following sale5% in the second month following sale

The following sales are expected:

Expected SalesJanuary $180,000 February $190,000 March $180,000

Cash collections in March should be budgeted to be:

$184,500

$175,500

$180,000

$180,900

8.Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.79 direct labor-hours. The direct labor rate is $11.30 per direct labor-hour. The production budget calls for producing 6,800 units in October and 6,600 units in November. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,480 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?

$123,848.00

$119,621.80

$120,842.20

$122,627.60

9.LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.2 hours of direct labor at the rate of $18.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.

The budgeted direct labor cost per unit of Product WZ would be:

$5.40

$18.00

$17.20

$39.60

10.The manufacturing overhead budget at Latronica Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 6,800 direct labor-hours will be required in August. The variable overhead rate is $7.30 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $138,720 per month, which includes depreciation of $24,890. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for August should be:

$27.70

$24.20

$7.30

$20.40

11.Diskind Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 7,600 units, but its actual level of activity was 7,550 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:

Fixed element

per month

Variableelement per tenant-day

Revenue — $35.10 Direct labor $0 $5.70 Direct materials 0 13.10 Manufacturing overhead 33,000 2.60 Selling and administrative expenses 26,400 4.00

Total expenses $59,400 $25.40

Actual results for October:

Revenue $266,200 Direct labor $43,110 Direct materials $99,990 Manufacturing overhead $48,000 Selling and administrative expenses $30,560

The revenue variance in October would be closest to:

$560 F

$1,195 F

$1,195 U

$560 U

12.Galante Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During May, Kennel budgeted for 4,800 tenant-days, but its actual level of activity was 4,780 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:


Fixed element

per month

Variable element per tenant-day

Revenue — $31.30 Wages and salaries $3,800 $7.30 Expendables 400 12.10 Facility expenses 8,800 4.30 Administrative expenses 8,600 0.10


Actual results for May:

Revenue $108,580 Wages and salaries $23,580 Expendables $36,798 Facility expenses $19,330 Administrative expenses $9,156

The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for May would be closest to:

$5,466 F

$5,316 U

$5,316 F

$5,466 U

13.Roye Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During September, Kennel budgeted for 3,200 tenant-days, but its actual level of activity was 3,250 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for September:


Fixed element

per month


Revenue — $34.10 Wages and salaries $2,100 $7.10 Expendables 1,100 13.60 Facility expenses 7,600 2.60 Administrative expenses 6,100 0.20


Actual results for September:


The revenue variance for September would be closest to:

$1,769 F

$1,769 U

$3,474 F

$3,474 U

14.Sissac Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is $580 per month plus $107 per job plus $23 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host's home. The company expected its activity in May to be 15 jobs and 124 meals, but the actual activity was 10 jobs and 129 meals. The actual cost for catering supplies in May was $4,450. The spending variance for catering supplies in May would be closest to:

$167 U

$587 U

$587 F

$167 F

15.Cadavieco Detailing's cost formula for its materials and supplies is $2,000 per month plus $5 per vehicle. For the month of November, the company planned for activity of 95 vehicles, but the actual level of activity was 55 vehicles. The actual materials and supplies for the month was $2,320.

The spending variance for materials and supplies in November would be closest to:

$45 F

$155 U

$45 U

$155 F

16.

Diskind Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 7,100 units, but its actual level of activity was 7,050 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:


Fixedelement

per month

Variableelement per tenant-day

Revenue — $34.60 Direct labor $0 $6.60 Direct materials 0 13.10 Manufacturing overhead 41,000 2.10 Selling and administrative expenses 25,900 0.60


Actual results for October:

Revenue $244,930 Direct labor $46,320 Direct materials $93,535 Manufacturing overhead $45,500 Selling and administrative expenses $30,510

The direct labor in the planning budget for October would be closest to:

$46,320

$46,530

$46,830

$46,860



Fixed element

per month






The net operating income in the planning budget for May would be closest to:

$13,280

$19,793

$19,699

$13,136



Fixed element

per month






The spending variance for expendables in September would be closest to:

$905 U

$905 F

$601 U

$601 F



Fixed element

per month






The activity variance for net operating income in May would be closest to:

$2,149 U

$192 U

$192 F

$2,149 F



Fixed element

per month






The spending variance for facility expenses in September would be closest to:

$860 U

$968 F

$860 F

$968 U

21.The management of Freshwater Corporation is considering dropping product C11B. Data from the company's accounting system appear below:

Sales $921,000 Variable expenses $404,500 Fixed manufacturing expenses $335,000 Fixed selling and administrative expenses $242,000

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $206,500 of the fixed manufacturing expenses and $117,500 of the fixed selling and administrative expenses are avoidable if product C11B is discontinued.

What would be the effect on the company's overall net operating income if product C11B were dropped?

Overall net operating income would decrease by $192,500.

Overall net operating income would increase by $60,500.

Overall net operating income would decrease by $60,500.

Overall net operating income would increase by $192,500.

22.The constraint at Mcglathery Corporation is time on a particular machine. The company makes three products that use this machine. Data concerning those products appear below:

UE BI CRSelling price per unit $335.15 $228.43 $199.18 Variable cost per unit $259.32 $173.14 $159.67 Minutes on the constraint 7.20 4.00 5.20

Assume that sufficient time is available on the constrained machine to satisfy demand for all but the least profitable product. Up to how much should the company be willing to pay to acquire more of the constrained resource? (Round your intermediate calculations and final answer to 2 decimal places.)

$39.51 per unit

$13.82 per minute

$7.60 per minute

$75.83 per unit

23.Coakley Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $41 to buy from farmers and $15 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $19 or processed further for $11 to make the end product industrial fiber that is sold for $31. The beet juice can be sold as is for $39 or processed further for $39 to make the end product refined sugar that is sold for $75. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?

$(3)

$(12)

$(60)

$(26)

24.Sohr Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $54 to buy from farmers and $13 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $24 or processed further for $17 to make the end product industrial fiber that is sold for $65. The beet juice can be sold as is for $45 or processed further for $21 to make the end product refined sugar that is sold for $65.

How much profit (loss) does the company make by processing one batch of sugar beets into the end products industrial fiber and refined sugar?

$(105)

$25

$(4)

$11

25.The Tingey Company has 500 obsolete microcomputers that are carried in inventory at a total cost of $720,000. If these microcomputers are upgraded at a total cost of $210,000, they can be sold for a total of $270,000. As an alternative, the microcomputers can be sold in their present condition for $50,000.

Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition?

$770

$520

$430

$210

26.The Tingey Company has 400 obsolete microcomputers that are carried in inventory at a total cost of $576,000. If these microcomputers are upgraded at a total cost of $170,000, they can be sold for a total of $230,000. As an alternative, the microcomputers can be sold in their present condition for $40,000.

What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?

$190,000 advantage

$60,000 advantage

$20,000 advantage

$630,000 disadvantage

27.Lusk Company produces and sells 14,200 units of Product A each month. The selling price of Product A is $24 per unit, and variable expenses are $18 per unit. A study has been made concerning whether Product A should be discontinued. The study shows that $73,000 of the $103,000 in fixed expenses charged to Product A would continue even if the product was discontinued. These data indicate that if Product A is discontinued, the company's overall net operating income would:

increase by $17,800 per month

decrease by $55,200 per month

decrease by $47,800 per month

increase by $47,800 per month

28.

Sohr Corporation processes sugar beets that it purchases from farmers. Sugar beets are processed in batches. A batch of sugar beets costs $54 to buy from farmers and $11 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $16 or processed further for $15 to make the end product industrial fiber that is sold for $66. The beet juice can be sold as is for $49 or processed further for $19 to make the end product refined sugar that is sold for $66.

How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?

$(75)

$(33)

$(21)

$(2)

29.The Varone Company makes a single product called a Hom. The company has the capacity to produce 40,000 Homs per year. Per unit costs to produce and sell one Hom at that activity level are:

Direct materials $24 Direct labor $14 Variable manufacturing overhead $9 Fixed manufacturing overhead $11 Variable selling expense $10 Fixed selling expense $6

The regular selling price for one Hom is $80. A special order has been received at Varone from the Fairview Company to purchase 6,700 Homs next year at 20% off the regular selling price. If this special order were accepted, the variable selling expense would be reduced by 30%. However, Varone would have to purchase a specialized machine to engrave the Fairview name on each Hom in the special order. This machine would cost $11,200 and it would have no use after the special order was filled. The total fixed costs, both manufacturing and selling, are constant within the relevant range of 30,000 to 40,000 Homs per year. Assume direct labor is a variable cost.

If Varone can expect to sell 30,000 Homs next year through regular channels and the special order is accepted at 20% off the regular selling price, the effect on net operating income next year due to accepting this order would be a:

$22,800 decrease

$51,200 increase

$55,800 increase

$67,000 increase

30.Broze Company makes four products in a single facility. These products have the following unit product costs:

Products

A B C DDirect materials $13.80 $9.70 $10.50 $10.10 Direct labor 18.90 26.90 33.10 39.90 Variable manufacturing overhead 3.80 2.20 2.10 2.70 Fixed manufacturing overhead 26.00 34.30 26.10 36.70

Unit product cost $62.50 $73.10 $71.80 $89.40

Additional data concerning these products are listed below.

Products

A B C DGrinding minutes per unit 3.30 4.60 3.80 2.90 Selling price per unit $75.60 $93.00 $86.90 $103.70 Variable selling cost per unit $1.70 $.70 $2.80 $1.10 Monthly demand in units 3,500 3,500 2,500 2,700

The grinding machines are potentially the constraint in the production facility. A total of 53,200 minutes are available per month on these machines.

Direct labor is a variable cost in this company.

How many minutes of grinding machine time would be required to satisfy demand for all four products?

44,980

9,600

33,430

53,200

managerial accounting hw2

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