1) Mmanagement of Hamano Corporation would like you to analyze their repair costs, that are given below:
|
|
Machine-Hours
|
Repair-Hours
|
|
April
|
4,459
|
$98,523
|
|
May
|
4,426
|
$98,296
|
|
June
|
4,493
|
$98,781
|
|
July
|
4,417
|
$98,207
|
|
August
|
4,432
|
$98,349
|
|
September
|
4,446
|
$98,420
|
|
October
|
4,489
|
$98,749
|
|
November
|
4,475
|
$98,654
|
Management believes that repair cost is a mixed cost which depends on number of machine-hours. Using least-squares regression method, estimates of variable and fixed components of repair cost would be closest to:
a) $22.11 per machine-hour plus $98,497 per month
b) $7.37 per machine-hour plus $65,670 per month
c) $8.19 per machine-hour plus $62,015 per month
d) $7.55 per machine-hour plus $64,859 per month
2) During recent lengthy strike at Morell Manufacturing Company, management replaced striking assembly line workers with office workers. Assembly line workers were being paid $18 per hour whereas office workers are only paid $10 per hour. Determine the most likely effect on labor variances in first month of this strike?
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Labor Rate Variance
|
Labor Efficiency Variance
|
|
A)
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Unfavorable
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No effect
|
|
B)
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No effect
|
Unfavorable
|
|
C)
|
Unfavorable
|
Favorable
|
|
D)
|
Favorable
|
Unfavorable
|
a) Item A
b) Item B
c) Item C
d) Item D
3) Journal entry below
|
Work in Process
|
25,000
|
|
Direct Labor Efficiency Variance
|
1,200
|
|
Direct Labor Rate Variance
|
2,000
|
|
Accrued Wages Payable
|
24,200
|
Indicates that:
A. Total labour variance was $800, unfavourable.
B. Employees received unexpected rate increase during period.
C. More labour time was required to complete output of period than was allowed at standard.
D. Responses a and b are both correct.