Penn Foster 061683RR â Planning, PerformanceQuestions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer.Use the following information to answer this question.Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: Standard Quantity Standard Cost per bagDirect material 20 pounds $8.00Direct labor 0.1 hours $1.10Variable overhead 0.1 hours $0.40The company had no beginning inventories of any kind on January 1. Variable overhead is applied to production on the basis of standard direct-labor hours. During January, the company recorded the following activity:⢠Production of Fastgro: 4,000 bags⢠Direct materials purchased: 85,000 pounds at a cost of $32,300⢠Direct-labor worked: 390 hours at a cost of $4,875⢠Variable overhead incurred: $1,475⢠Inventory of direct materials on January 31: 3,000 pounds1. The labor efficiency variance for January isA. $110 F.B. $350 U.C. $130 U.D. $475 F.2. Which of the following will not result in an increase in return on investment (ROI), assuming other factors remain the same?A. An increase in salesB. A reduction in expensesC. An increase in net operating incomeD. An increase in operating assetsUse the following information to answer this question.The Adams Company, a merchandising firm, has budgeted its activity for November according to the following information:⢠Sales were at $450,000, all for cash.⢠Merchandise inventory on October 31 was $200,000.⢠The cash balance on November 1 was $18,000.⢠Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash.⢠Budgeted depreciation for November is $25,000.⢠The planned merchandise inventory on November 30 is $230,000.⢠The cost of goods sold is 70% of the selling price.⢠All purchases are paid for in cash.3. The budgeted cash disbursements for November areA. $530,000.B. $375,000.C. $405,000.D. $345,000.Use the following information to answer this question.The Adams Company, a merchandising firm, has budgeted its activity for November according to the following information:⢠Sales were at $450,000, all for cash.⢠Merchandise inventory on October 31 was $200,000.⢠The cash balance on November 1 was $18,000.⢠Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash.⢠Budgeted depreciation for November is $25,000.⢠The planned merchandise inventory on November 30 is $230,000.⢠The cost of goods sold is 70% of the selling price.⢠All purchases are paid for in cash.4. The budgeted net income for November isA. $135,000.B. $50,000.C. $68,000.D. $75,000.5. Lyons Company consists of two divisions, A and B. Lyons Company reported a contribution margin of $50,000 for Division A and had a contribution margin ratio of 30% in Division B, when sales in Division B were $200,000. Net operating income for the company was $25,000, and traceable fixed expenses were $40,000. Lyons Company’s common fixed expenses wereA. $70,000.B. $85,000.C. $40,000.D. $45,000.6. Coles Company, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows:August 14,000 unitsSeptember 14,500 unitsOctober 15,500 unitsNovember 12,600 unitsDecember 11,900 unitsThe company wants to maintain monthly ending inventories of Material K equal to 20% of the following month’s production needs. On July 31, this requirement wasn’t met because only 2,500 yards of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year.The total cost of Material K to be purchased in August isA. $48,200.B. $40,970.C. $33,840.D. $42,300.7. Vandall Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During April, the company budgeted for 7,300 units, but its actual level of activity was 7,340 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for April:Data used in budgeting:Fixed element per month Variable element per client-visitRevenue ___-___ $35.40Direct labor 0 $3.30Direct materials 0 15.90Manufacturing overhead 49,200 1.20Selling and administrative expenses 26,600 0.10Total expenses $75,800 $20.50Actual results for April:Revenue $254,146Direct labor $ 24,722Direct materials $116,496Manufacturing overhead $ 59,608Selling and administrative expenses $ 26,494The overall revenue and spending variance (i.e., the variance for net operating income in the revenue and spending variance column on the flexible budget performance report) for April would be closest toA. $6,144 U.B. $6,740 U.C. $6,144 F.D. $6,740 F.8. A company’s average operating assets are $220,000, and its net operating income is $44,000. The company invested in a new project, increasing average assets to $250,000 and increasing its net operating income to $49,550. What is the project’s residual income if the required rate of return is 20%?A. ($450)B. $600C. $450D. ($600)Use the following information to answer this question.Werber Clinic uses client visits as its measure of activity. During January, the clinic budgeted for 2,700 client visits, but its actual level of activity was 2,730 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:Data used in budgeting:Fixed element per month Variable element per client-visitRevenue ___-___ $33.60Personnel expenses $22,100 $8.70Medical supplies 1,100 6.60Occupancy expenses 5,600 1.60Administrative expenses 3,700 0.40Total expenses $32,500 $17.30Actual results for January:Revenue $93,408Personnel expenses $46,251Medical supplies $19,348Occupancy expenses $9,508Administrative expenses $4,7729. The activity variance for administrative expenses in January would be closest toA. $8 F.B. $8 U.C. $12 U.D. $12 F.Use the following information to answer this question.Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: Standard Quantity Standard Cost per bagDirect material 20 pounds $8.00Direct labor 0.1 hours $1.10Variable overhead 0.1 hours $0.40The company had no beginning inventories of any kind on January 1. Variable overhead is applied to production on the basis of standard direct-labor hours. During January, the company recorded the following activity:⢠Production of Fastgro: 4,000 bags⢠Direct materials purchased: 85,000 pounds at a cost of $32,300⢠Direct-labor worked: 390 hours at a cost of $4,875⢠Variable overhead incurred: $1,475⢠Inventory of direct materials on January 31: 3,000 pounds10. The total variance (both rate and efficiency) for variable overhead for January isA. $100 U.B. $40 F.C. $125 F.D. $85 F.Use the following information to answer this question.Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for 3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December:Data used in budgeting:Fixed element per month Variable element per client-visitRevenue ____-____ $25.10Personnel expenses $27,100 $7.10Medical supplies 1,500 4.50Occupancy expenses 6,000 1.00Administrative expenses 3,000 0.10Total expenses $37,600 $12.70Actual results for December:Revenue $96,299Personnel expenses $51,009Medical supplies $17,425Occupancy expenses $9,240Administrative expenses $3,23911. The personnel expenses in the planning budget for December would be closest toA. $53,299.B. $51,147.C. $53,370.D. $51,009.Use the following information to answer this question.Cole Laboratories makes and sells a lawn fertilizer called Fastgro. The company has developed standard costs for one bag of Fastgro as follows: Standard Quantity Standard Cost per bagDirect material 20 pounds $8.00Direct labor 0.1 hours $1.10Variable overhead 0.1 hours $0.40The company had no beginning inventories of any kind on January 1. Variable overhead is applied to production on the basis of standard direct-labor hours. During January, the company recorded the following activity:⢠Production of Fastgro: 4,000 bags⢠Direct materials purchased: 85,000 pounds at a cost of $32,300⢠Direct-labor worked: 390 hours at a cost of $4,875⢠Variable overhead incurred: $1,475⢠Inventory of direct materials on January 31: 3,000 pounds12. The materials price variance for January isA. $1,640 F.B. $1,300 U.C. $1,700 F.D. $1,640 U.13. Division X of Charter Corporation makes and sells a single product which is used by manufacturers of fork lift trucks. Presently it sells 12,000 units per year to outside customers at $24 per unit. The annual capacity is 20,000 units and the variable cost to make each unit is $16. Division Y of Charter Corporation would like to buy 10,000 units a year from Division X to use in its products. There would be no cost savings from transferring the units within the company rather than selling them on the outside market. What should be the lowest acceptable transfer price from the perspective of Division X?A. $21.40B. $17.60C. $24.00D. $16.00Use the following information to answer this question.Werber Clinic uses client visits as its measure of activity. During January, the clinic budgeted for 2,700 client visits, but its actual level of activity was 2,730 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January:Data used in budgeting:Fixed element per month Variable element per client-visitRevenue ___-___ $33.60Personnel expenses $22,100 $8.70Medical supplies 1,100 6.60Occupancy expenses 5,600 1.60Administrative expenses 3,700 0.40Total expenses $32,500 $17.30Actual results for January:Revenue $93,408Personnel expenses $46,251Medical supplies $19,348Occupancy expenses $9,508Administrative expenses $4,77214. The activity variance for net operating income in January would be closest toA. $489 F.B. $2,019 U.C. $2,019 F.D. $489 U.15. There are various budgets within the master budget. One of these budgets is the production budget. Which of the following best describes the production budget?A. It details the required direct-labor hours.B. It’s calculated based on the sales budget and the desired ending inventory.C. It summarizes the costs of producing units for the budget period.D. It details the required raw materials purchases.16. The budget or schedule that provides necessary input data for the direct-labor budget is theA. schedule of cash collections.B. raw materials purchases budget.C. cash budget.D. production budget.17. Manufacturing Cycle Efficiency (MCE) is computed asA. Value-Added Time divided by Delivery Cycle Time.B. Throughput Time divided by Delivery Cycle Time.C. Process Time divided by Delivery Cycle Time.D. Value-Added Time divided by Throughput Time.Use the following information to answer this question.Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for 3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December:Data used in budgeting:Fixed element per month Variable element per client-visitRevenue ____-____ $25.10Personnel expenses $27,100 $7.10Medical supplies 1,500 4.50Occupancy expenses 6,000 1.00Administrative expenses 3,000 0.10Total expenses $37,600 $12.70Actual results for December:Revenue $96,299Personnel expenses $51,009Medical supplies $17,425Occupancy expenses $9,240Administrative expenses $3,23918. The medical supplies in the flexible budget for December would be closest toA. $18,105.B. $17,472.C. $18,150.D. $17,378.LDG Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.0 hours of direct labor at the rate of $10.50 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.19. The company plans to sell 22,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 100 and 400 units, respectively. Budgeted direct labor costs for June would be:A. $234,150B. $468,300C. $462,000D. $455,700Use the following information to answer this question.Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for 3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December:Data used in budgeting:Fixed element per month Variable element per client-visitRevenue ____-____ $25.10Personnel expenses $27,100 $7.10Medical supplies 1,500 4.50Occupancy expenses 6,000 1.00Administrative expenses 3,000 0.10Total expenses $37,600 $12.70Actual results for December:Revenue $96,299Personnel expenses $51,009Medical supplies $17,425Occupancy expenses $9,240Administrative expenses $3,23920. The revenue variance for December would be closest toA. $3,429 U.B. $3,680 U.C. $3,680 F.D. $3,429 F.
