Questions -
Q1. The production budget shows that expected unit sales are 40,000. The total required units are 45,000. What are the required production units?
a. 5,000
b. 7,500
c. 10,000
d. Cannot be determined from the data provided.
Q2. The direct materials budget shows:
Units to be produced 3,000
Total pounds needed for production 12,000
Total materials required 13,200
What are the direct materials per unit?
a. .44 pounds
b. 4.0 pounds
c. 4.4 pounds
d. Cannot be determined from the data provided.
Q3. The direct materials budget shows:
Desired ending direct materials 36,000 pounds
Total materials required 54,000 pounds
Direct materials purchases 47,400 pounds
The total direct materials needed for production is
a. 18,000 pounds.
b. 6,600 pounds.
c. 11,400 pounds.
d. 101,400 pounds.
Q4. If the required direct materials purchases are 18,000 pounds, the direct materials required for production is three times the direct materials purchases, and the beginning direct materials are three and a half times the direct materials purchases, what are the desired ending direct materials in pounds?
a. 45,000
b. 9,000
c. 27,000
d. 18,000
Q5. Razmataz Company makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available:
Variable Cost Per Unit Sold Monthly Fixed Cost
Sales commissions $0.60 $ 3,000
Shipping 1.20
Advertising 0.30
Executive salaries 20,000
Depreciation on office equipment 4,000
Other 0.35 14,000
Expenses are paid in the month incurred. If the company has budgeted to sell 4,000 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October?
a. $8,400
b. $9,200
c. $50,800
d. $9,800
Q6. A company budgeted unit sales of 102,000 units for January, 2008 and 120,000 units for February, 2008. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 30,600 units of inventory on hand on December 31, 2007, how many units should be produced in January, 2008 in order for the company to meet its goals?
a. 107,400 units
b. 102,000 units
c. 96,600 units
d. 138,000 units
Q7. At January 1, 2008, Ceatric, Inc. has beginning inventory of 2,000 surfboards. Ceatric estimates it will sell 5,000 units during the first quarter of 2008 with a 12% increase in sales each quarter. Ceatric's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2008?
a. $225,000
b. $975,000
c. $940,800
d. $6,272
Q8. Sargent.Com plans to sell 2,000 purple lawn chairs during May, 1,900 in June, and 2,000 during July. The company keeps 15% of the next month's sales as ending inventory. How many units should Sargent.Com produce during June?
a. 1,915
b. 2,200
c. 1,885
d. Not enough information to determine.
Q9. Secret Prizes, Inc. is planning to sell 200 buckets and produce 190 buckets during March. Each bucket requires 500 grams of plastic and one-half hour of direct labor. Plastic costs $10 per 500 grams and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Secret Prizes has 300 kilos of plastic in beginning inventory and wants to have 200 kilos in ending inventory. How much is the total amount of budgeted direct labor for March?
a. $1,500
b. $3,000
c. $1,425
d. $2,850
Use the following information for questions 10-12
Sudler Production is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.50 per pound and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Sudler has 2,600 pounds of clay mix in beginning inventory and wants to have 3,000 pounds in ending inventory.
Q10. Round Company currently produces cardboard boxes in an automated process. Expected production per month is 40,000 units. The required direct materials cost $0.30 per unit. Manufacturing fixed overhead costs are $24,000 per month. The cost driver for manufacturing fixed overhead costs is units of production. In a flexible budget at 20,000 units, the total fixed cost is ________ per month and the total variable cost is ________ per month.
A) $24,000; $6,000
B) $24,000; $12,000
C) $12,000; $6,000
D) $12,000; $12,000
Q11. Red Company had the following information available:
Expected Costs and Selling Price Based on 5,000 Units:
Variable manufacturing costs per unit $32
Fixed manufacturing costs per unit $20
Selling price per unit $70
Expected production level 5,000 units
In the flexible budget at 15,000 units, what is the total manufacturing cost?
A) $480,000
B) $580,000
C) $680,000
D) $780,000
Q12. The following data are for Sacramento Corporation:
Actual Static Budget Flexible Budget for Actual Sales Activity
Units 18,000 16,000 18,000
Sales $360,000 $320,000 $360,000
Variable costs 234,000 192,000 216,000
Contribution margin $126,000 $128,000 $144,000
Fixed costs 76,000 80,000 80,000
Operating income $50,000 $48,000 $64,000
The static budget variance for operating income is ________.
A) $2,000 Favorable
B) $2,000 Unfavorable
C) $16,000 Favorable
D) $16,000 Unfavorable