# Practice Problems Chapter 119.Interspace Merchandising anticipated selling 29,000 units of amajor pr

Practice Problems Chapter 119.Interspace Merchandising anticipated selling 29,000 units of amajor product and paying sales commissions of \$6 per unit. Actualsales and sales commissions totaled 31,500 units and \$182,700,respectively. If the company used a static budget for performanceevaluations, Interstate would report a cost variance of:A.\$6,300U.B. \$6,300F.C. \$8,700U.D. \$8,700F.E. None of the other answers are correct.Direct Material Quantity Variance=SP(AQ-SQ)\$6 (31,500-29,000) =\$15,000UDirect Material Price Variance= AQ (AP-SP)31500(*5.8-6)= \$-6,300F** AP 5.8 = \$182,700/31500 UnitsTherefore,Cost Variance=\$15,000U-\$6,300F=\$8,700U10.Gridiron Merchandising anticipated selling 27,000 units of a major product and paying sales commissions of \$6per unit. Actual sales and sales commissions totaled 27,500 units and \$171,400, respectively. If the companyused a flexible budget for performance evaluations, Gridiron would report a cost variance of:11.Bunnie’s Bakery anticipated making 17,000 fancy cakes during a recent period, requiring 14,000 hours of processtime. Each hour of process time was expected to cost the firm \$11. Actual activity for the period was higher thananticipated: 18,000 cakes and 15,200 hours. If each hour of process time actually cost Bunnie \$12, what processtime variance would be disclosed on a performance report that incorporated static budgets and flexible budgets?11-112.Trois Elles Corporation recently prepared a manufacturing cost budget for an output of 50,000 units, as follows:Actual units produced amounted to 60,000. Actual costs incurred were: direct materials, \$110,000; direct labor,\$60,000; variable overhead, \$100,000; and fixed overhead, \$97,000. If Trois Elles evaluated performance by theuse of a flexible budget, a performance report would reveal a total variance of:13.Zin, Inc. is planning its cash needs for an upcoming period when 85,000 machine hours are expected to beworked. Activity may drop as low as 78,000 hours if some overdue equipment maintenance procedures areperformed; on the other hand, activity could jump to 94,000 hours if one of Zin’s major competitors likely goesbankrupt. A flexible cash budget to determine cash needs would best be based on:14.Young Corporation has a high probability of operating at 40,000 activity hours during the upcoming period, andlower probabilities of operating at 30,000 hours and 50,000 hours. The company’s flexible budget revealed thefollowing:Young’s flexible-budget formula, where Y is defined as total cost and AH represents activity hours, is:11-215.Young Corporation has a high probability of operating at 40,000 activity hours during the upcoming period, andlower probabilities of operating at 30,000 hours and 50,000 hours. The company’s flexible budget revealed thefollowing:If Young operated at 35,000 hours, its total budgeted cost would be:17.Gourmet Restaurants has the following flexible-budget formula:Y = \$13PH + \$450,000 where PH is defined as process hours.What is Gourmet’s budgeted total cost if its process hours equal 25,000?18.Delicious Treats (DT) anticipated that 84,000 process hours would be worked during an upcoming accountingperiod when, in fact, 92,000 hours were actually worked. One of the company’s cost functions is expressed asfollows:Y = \$16PH + \$640,000 where PH is defined as process hoursWhat budgeted dollar amount would appear in DT’s static budget and flexible budget for the preceding costfunction?19.Del’s Diner anticipated that 84,000 process hours would be worked during an upcoming accounting period when,in fact, 90,000 hours were actually worked. One of the company’s cost functions is expressed as follows:Y = \$16PH + \$640,000 where PH is defined as process hours11-3What is Del’s flexible budget (Y) for the preceding cost function?21.A flexible budget for 15,000 hours revealed variable manufacturing overhead of \$90,000 and fixed manufacturingoverhead of \$120,000. The budget for 25,000 hours would reveal total overhead costs of:22.A flexible budget for 15,000 hours revealed variable manufacturing overhead of \$90,000 and fixed manufacturingoverhead of \$120,000. The budget for 20,000 hours would reveal total overhead costs of:44.Rowe Corporation reported the following variances for the period just ended:Variable-overhead spending variance: \$50,000UVariable-overhead efficiency variance: \$28,000UFixed-overhead budget variance: \$70,000UFixed-overhead volume variance: \$30,000UIf Rowe desires to analyze variances that arose primarily from managers’ expenditures in excess of anticipatedamounts, the company should focus on variances that total:46.Robert Company, which applies overhead to production on the basis of machine hours, reported the followingdata for the period just ended:Actual units produced: 12,000Actual variable overhead incurred: \$77,700Actual machine hours worked: 18,80011-4Standard variable overhead cost per machine hour: \$4.50If Robert estimates 1.5 hours to manufacture a completed unit, the company’s variable-overhead spendingvariance is:47.Martin Company, which applies overhead to production on the basis of machine hours, reported the followingdata for the period just ended:Actual units produced: 9,000Actual variable overhead incurred: \$54,400Actual machine hours worked: 16,000Standard variable overhead cost per machine hour: \$3.50If Martin estimates two hours to manufacture a completed unit, the company’s variable-overhead efficiencyvariance is:48.Abbott has a standard variable overhead rate of \$4.50 per machine hour, and each unit produced has a standardtime allowed of three hours. The company’s static budget was based on 46,000 units. Actual results for the yearfollow.Actual units produced: 42,000Actual machine hours worked: 120,000Actual variable overhead incurred: \$520,000Abbott’s variable-overhead spending variance is:49.Abbott has a standard variable overhead rate of \$4.50 per machine hour, and each unit produced has a standardtime allowed of three hours. The company’s static budget was based on 46,000 units. Actual results for the yearfollow.Actual units produced: 42,000Actual machine hours worked: 120,000Actual variable overhead incurred: \$520,000Abbott’s variable-overhead efficiency variance is:50.Luke, Inc. has a standard variable overhead rate of \$5 per machine hour, with each completed unit expected totake three machine hours to produce. A review of the company’s accounting records found the following:11-5Actual production: 19,500 unitsVariable-overhead efficiency variance: \$9,000UVariable-overhead spending variance: \$21,000FWhat was Luke’s actual variable overhead during the period?51.Bushnell, Inc. has a standard variable overhead rate of \$4 per machine hour, with each completed unit expectedto take three machine hours to produce. A review of the company’s accounting records found the following:Actual variable overhead: \$210,000Variable-overhead efficiency variance: \$18,000UVariable-overhead spending variance: \$30,000FHow many units did Bushnell actually produce during the period?52.Darling Company, which applies overhead to production on the basis of machine hours, reported the followingdata for the period just ended:Actual units produced: 12,000Actual fixed overhead incurred: \$730,000Actual machine hours worked: 60,000Budgeted fixed overhead: \$720,000Planned level of machine-hour activity: 50,000If Darling estimates four hours to manufacture a completed unit, the company’s standard fixed overhead rate permachine hour would be:53.Herman Company, which applies overhead to production on the basis of machine hours, reported the followingdata for the period just ended:Actual units produced: 13,000Actual fixed overhead incurred: \$742,000Standard fixed overhead rate: \$15 per hourBudgeted fixed overhead: \$720,000Planned level of machine-hour activity: 48,000If Herman estimates four hours to manufacture a completed unit, the company’s fixed-overhead budget variancewould be:11-654.Enberg Company, which applies overhead to production on the basis of machine hours, reported the followingdata for the period just ended:Actual units produced: 14,800Actual fixed overhead incurred: \$791,000Standard fixed overhead rate: \$13 per hourBudgeted fixed overhead: \$780,000Planned level of machine-hour activity: 60,000If Enberg estimates four hours to manufacture a completed unit, the company’s fixed-overhead volume variancewould be:55.Benson Company, which uses a standard cost system, budgeted \$600,000 of fixed overhead when 40,000machine hours were anticipated. Other data for the period were:Actual units produced: 10,000Standard production time per unit: 3.9 machine hoursFixed overhead incurred: \$620,000Actual machine hours worked: 42,000Benson’s fixed-overhead budget variance is:56.Benson Company, which uses a standard cost system, budgeted \$600,000 of fixed overhead when 40,000machine hours were anticipated. Other data for the period were:Actual units produced: 10,000Standard production time per unit: 3.9 machine hoursFixed overhead incurred: \$620,000Actual machine hours worked: 42,000Benson’s fixed-overhead volume variance is:57.Atlanta Enterprises incurred \$828,000 of fixed overhead during the period. During that same period, the companyapplied \$845,000 of fixed overhead to production and reported an unfavorable budget variance of \$41,000. Howmuch was Atlanta’s budgeted fixed overhead?58.Rich Company, which uses a standard cost system, budgeted \$800,000 of fixed overhead when 50,000 machinehours were anticipated. Other data for the period were:11-7Actual units produced: 10,600Actual machine hours worked: 51,800Actual variable overhead incurred: \$475,000Actual fixed overhead incurred: \$790,100Standard variable overhead rate per machine hour: \$8.50Standard production time per unit: 5 hoursRich’s variable-overhead efficiency variance is:59.Rich Company, which uses a standard cost system, budgeted \$800,000 of fixed overhead when 50,000 machinehours were anticipated. Other data for the period were:Actual units produced: 10,600Actual machine hours worked: 51,800Actual variable overhead incurred: \$475,000Actual fixed overhead incurred: \$790,100Standard variable overhead rate per machine hour: \$8.50Standard production time per unit: 5 hoursRich’s fixed-overhead budget variance is:60.Sussex Company uses a standard cost system and prepared the following budget for May when 24,000 machinehours of activity were anticipated: variable overhead, \$48,000; fixed overhead: \$240,000. Actual data for Maywere:Standard machine hours allowed for output attained: 25,000Actual machine hours worked: 24,000Variable overhead incurred: \$50,000Fixed overhead incurred: \$250,000The standard variable overhead rate for May is:61.The variable-overhead spending and efficiency variances are:11-862.The fixed-overhead budget and volume variances are:63.Draco, Inc. has the following overhead standards:Variable overhead: 4 hours at \$8 per hourFixed overhead: 4 hours at \$10 per hourThe standards were based on a planned activity of 20,000 machine hours when 5,000 units were scheduled forproduction. Actual data follow.Variable overhead incurred: \$167,750Fixed overhead incurred: \$210,000Machine hours worked: 19,800Actual units produced: 5,100Draco’s fixed-overhead budget variance is:64.Draco, Inc. has the following overhead standards:Variable overhead: 4 hours at \$8 per hourFixed overhead: 4 hours at \$10 per hourThe standards were based on a planned activity of 20,000 machine hours when 5,000 units were scheduled forproduction. Actual data follow.Variable overhead incurred: \$167,75011-9Fixed overhead incurred: \$210,000Machine hours worked: 19,800Actual units produced: 5,100Draco’s fixed-overhead volume variance is:65.Draco, Inc. has the following overhead standards:Variable overhead: 4 hours at \$8 per hourFixed overhead: 4 hours at \$10 per hourThe standards were based on a planned activity of 20,000 machine hours when 5,000 units were scheduled forproduction. Actual data follow.Variable overhead incurred: \$167,750Fixed overhead incurred: \$210,000Machine hours worked: 19,800Actual units produced: 5,100Draco’s variable-overhead spending variance is:66.Draco, Inc. has the following overhead standards:Variable overhead: 4 hours at \$8 per hourFixed overhead: 4 hours at \$10 per hourThe standards were based on a planned activity of 20,000 machine hours when 5,000 units were scheduled forproduction. Actual data follow.Variable overhead incurred: \$167,750Fixed overhead incurred: \$210,000Machine hours worked: 19,800Actual units produced: 5,100Draco’s variable-overhead efficiency variance is:67.Draco, Inc. has the following overhead standards:Variable overhead: 4 hours at \$8 per hourFixed overhead: 4 hours at \$10 per hourThe standards were based on a planned activity of 20,000 machine hours when 5,000 units were scheduled forproduction. Actual data follow.Variable overhead incurred: \$167,75011-10Fixed overhead incurred: \$210,000Machine hours worked: 19,800Actual units produced: 5,100The amount of variable overhead that Draco applied to production is:68.Sand Box Company is choosing new cost drivers for its accounting system. One driver is labor hours; the other isa combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs. Datafor the past year follow.Assume that both cost pools are combined into a single pool, and labor hours is the driver. The total flexiblebudget for the actual level of labor hours and the total variance for the combined pool are:69.Sand Box Company is choosing new cost drivers for its accounting system. One driver is labor hours; the other isa combination of machine hours for unit variable costs and number of setups for a pool of batch-level costs. Datafor the past year follow.11-11Assume that the two separate pools are used. The flexible budget dollar amounts for the actual level of machinehours and actual number of setups are:74.Master Products has the following information for the year just ended:The company’s sales-volume variance is:75.Master Products has the following information for the year just ended:11-12The company’s sales-price variance is:11-13

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