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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?

 

Labor Rate Variance

Labor Efficiency Variance

A)

Unfavorable

No effect

B)

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.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M916286

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