ACCT 2521 Chapter 8 Quiz PDF

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ACCT 2521 Chapter 8 Quiz 1. Gilder Corp. makes a product with the following standard costs: Standard Price or Standard Cost Standard Quantity or Hours Rate Per Unit Direct materials 3.8 grams $4.00 per gram $15.20 Direct labor 0.8 hours $10.00 per hour $8.00 Variable overhead 0.8 hours $4.00 per hour $3.20 The company reported the following results concerning this product in June Originally budgeted output 7,700 units Actual output 7,600 units Raw materials used in production 28,320 grams Purchases of raw materials 31,200 grams Actual direct labor-hours 5,500 hours $127,920 Actual cost of raw materials purchases Actual direct labor cost $59,950 Actual variable overhead cost $20,350 The company applies variable overhead on the basis of direct labor hours. The DM purchases variance is computed when the materials are purchase. The labor efficiency variance for June is: $5,800 F SH = 7,600 units’ x 0.8 hrs/unit = 6,080 hrs Labor efficiency variance = (AH – SH) SR; (5,500 hrs – 6,080 hrs) $10/hr = (-580 hrs) $10 2. Gilder Corp. makes a product with the following standard costs: Standard Price or Standard Cost Standard Quantity or Hours Rate Per Unit Direct materials 9.20 grams $8.00 per gram $73.60 Direct labor 0.1 hours $16.00 per hour $1.60 Variable overhead 0.1 hours $8.00 per hour $0.80 The company reported the following results concerning this product in June Originally budgeted output 7,300 units Actual output 7,400 units Raw materials used in production 40,800 grams Purchases of raw materials 47,300 grams Actual direct labor-hours 650 hours $262,590 Actual cost of raw materials purchases Actual direct labor cost $8,203 Actual variable overhead cost $3,170 The labor rate variance for June is: $2,197 F

Labor rate variance – (AH x AR) – (AH x SR) = ($8,203) – (650 hrs x $16/hr) = $2,197 F 3. Gilder Corp. makes a product with the following standard costs: Standard Price or Standard Cost Standard Quantity or Hours Rate Per Unit Direct materials 4.8 grams $7.00 per gram $33.60 Direct labor 0.8 hours $13.00 per hour $10.40 Variable overhead 0.8 hours $8.00 per hour $6.40 The company reported the following results concerning this product in June Originally budgeted output 6,200 units Actual output 6,100 units Raw materials used in production 28,420 grams Purchases of raw materials 32,200 grams Actual direct labor-hours 4,800 hours $228,620 Actual cost of raw materials purchases Actual direct labor cost $66,720 Actual variable overhead cost $36,960 The variable overhead rate variance for June is: $1,440 F Variable overhead rate variance = AH(AR – SR) = 4,800 hrs ($7.70/hr - $8/hr) = 4,800 hrs (-$0.30/hr) = $1,440 F 4. Gilder Corp. makes a product with the following standard costs: Standard Quantity Standard Price or Standard Cost or Hours Rate Per Unit Direct materials 4.1 grams $7.00 per gram $28.70 Direct labor 1.6 hours $16.00 per hour $25.60 Variable overhead 1.6 hours $7.00 per hour $11.20 The company reported the following results concerning this product in June. Originally budgeted output 7,100 units Actual output 7,000 units Raw materials used in production 28,350 grams Purchases of raw materials 31,500 grams Actual direct labor-hours 4,200 hours $223,650 Actual cost of raw materials purchases Actual direct labor cost $70,980 Actual variable overhead cost $28,140 The materials quantity variance for June is: $2,450 F SQ = 7,000 units’ x 4.1 grams/unit = 28,700 grams Materials quantity variance = (AQ – SQ) SP (28,350 grams – 28,700 grams) $7/gram = (-350 grams) $7/gram = $2,450 F

5. The Swenson Corp. has a standard costing system. The data for june: Actual quantity of direct materials purchased 30,000 pounds Standard price of direct materials $5 per pound Material price variance $3,000 unfavorable Material quantity variance $2,000 favorable The actual price per pound of DM purchased in June is: $5.10 Materials price variance = AQ x (AP – SP) $3,000 U = 30,000 lbs x (AP - $5/lbs); $3,000 = 30,000 lbs x (AP - $5/lbs) AP - $5/lbs = $3,000/30,000 lbs; AP - $5/lbs = $0.10/lbs; AP = $5/lbs + $0.10/lbs 6. Gilder Corp. makes a product with the following standard costs Standard Price or Standard Cost Standard Quantity or Hours Rate Per Unit Direct materials 5.3 grams $7.00 per gram $37.10 Direct labor 0.8 hours $18.00 per hour $14.40 Variable overhead 0.8 hours $7.00 per hour $5.60 The company reported the following results concerning this product in June Originally budgeted output 5,700 units Actual output 5,600 units Raw materials used in production 28,470 grams Purchases of raw materials 32,700 grams Actual direct labor-hours 4,400 hours $232,170 Actual cost of raw materials purchases Actual direct labor cost $83,160 Actual variable overhead cost $29,480 The variable overhead efficiency variance for June is: $560 F SH = 5,600 units x 0.8 hrs per unit = 4,480 hours Variable overhead efficiency variance = (AH – SH) SR (4,400 hrs – 4,480 hrs) $7 per hr; (-80 hrs) $7 per hours = $560 F 7. Paradiso Medical Clinic measures its activity in terms of patient visits. Last month, the budgeted level of activity was 1,110 patients visits and the actual level of activity was 1,100 patient visits. The cost formula for admin expenses is $3.50 per patient visit plus $19,500 per month. The actual admin expense was $20,800. In the clinic’s performance report for last month, the spending variance for admin expenses was: $2,550 F Actual results $20,800 Flexible budget [$19,500 + ($3.50 × 1,100)] 23,350 Spending variance $2,550

BC flexible budget is greater than actual expense, variance is favorable (F) 8. Krizum Industries makes heavy construction equipment. The standard for a particular crane calls for 12 DLH at $16 per DLH. During a recent period 900 cranes were made. The labor rate variance was zero and the labor efficiency variance was $4,400 unfavorable. How many actual DLH were worked?: 11,075 The labor rate variance of zero implies that the standard labor rate is equal to the actual labor rate of $16 per DLH Labor efficiency variance = (AH – SH) x SR $4,400 U = [AH – (900 cranes x 12 hrs/crane)] x $16/hr $4,400 = [AH – (10,800 hrs)] x $16 per hour; $4,400=(AH x $16 per hour) - $172,800 AH x $16 per hour = $172,800 + $4,400; AH x $16 per hour = $177,200; $177,200 / $16 = 11,075 hrs 9. Gilder Corp. makes a product with the following standard costs: Standard Quantity Standard Price or Standard Cost or Hours Rate Per Unit Direct materials 5.6 grams $4.00 per gram $22.40 Direct labor 1.9 hours $19.00 per hour $36.10 Variable overhead 1.9 hours $4.00 per hour $7.60 The company reported the following results concerning this product in June Originally budgeted output 5,400 units Actual output 5,300 units Raw materials used in production 28,500 grams Purchases of raw materials 33,000 grams Actual direct labor-hours 5,700 hours $135,300 Actual cost of raw materials purchases Actual direct labor cost $113,430 Actual variable overhead cost $21,090 The materials price variance for june is: $3,300 U Materials price variance = AQ (AP – SP) 33,000 grams ($4.10 per gram - $4.00 per gram) 33,000 grams ($0.10 per gram) = $3,300 U 10. Smith 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 February, the kennel budgeted for 3,700 tenant days, but its actual level of activity was 3,740 tenant days. The kennel has provided the data concerning formulas used in its budgeting and its actual results for February : data used in budgeting:

Fixed

Variable

Revenue Wages and salaries Food and supplies Facility expenses Administrative expenses Total expenses Actual results for February: Revenue

element per month —

element per tenant-day $34.60

$2,600 1,600 8,100 6,600 $18,900

$7.60 14.10 3.10 0.10 $24.90

$125,356

Wages and salaries $28,560 Food and supplies $54,875 Facility expenses $19,150 Administrative expenses $7,096 The overall revenue and spending variance (variance for NOI in rev and spending variance column on rev and spending variances report) for Feb closest to: $1,703 U Revenue Wages and salaries Food and supplies Facility expenses Administrative expenses

$125,356 $28,560 54,875 19,150 7,096

Net operating income Revenue per tenant-day Total variable expense per tenant-day Contribution margin per tenant-day Total fixed expense

109,681 $15,675 $ 34.60 24.90 $ 9.70 $ 18,900

Actual net operating income $15,675 Flexible budget [($9.7 × 3,740) − $18,900] 17,378 Overall variance $ 1,703 BC the actual NOI is less than the flexible budget, the variance is unfavorable (U)...