Question

42.

Assume the following information appears in the standard cost card for a company that makes only one product:

	Standard Quantity or hours		Standard Price or Rate			Standard Cost
Direct materials	5	pounds	$	11.40	per pound	$	57.00
Direct labor	2	hours	$	17.00	per hour	$	34.00
Variable manufacturing overhead	2	hours	$	3.00	per hour	$	6.00

During the most recent period, the following additional information was available:

• 20,000 pounds of material was purchased at a cost of $10.50 per pound.
• All of the material that was purchased was used to produce 3,900 units.
• 8,000 direct labor-hours were recorded at a total cost of $132,000.

What is the direct materials quantity variance?

Multiple Choice

• $5,700 F

• $5,250 F

• $5,700 U

• $5,250 U

43.

Assume the following budgeted information for a merchandising company:

• Budgeted sales (all on credit) for November, December, and January are $240,000, $210,000, and $201,000, respectively.
• Cash collections related to credit sales are expected to be 80% in the month of sale, 20% in the month following the sale.
• The cost of goods sold is 70% of sales.
• Each month’s ending inventory equals 15% of next month’s cost of goods sold.
• 30% of each month’s merchandise purchases are paid in the current month and the remainder is paid in the following month.
• Monthly selling and administrative expenses that are paid in cash in the month incurred total $21,000.
• Monthly depreciation expense is $5,000.

The budgeted net operating income for December would be:

Multiple Choice

• $19,530

• $42,000

• $37,000

• $14,530

Answer 1

42.

DIRECT MATERIAL QUANTITY VARIANCE
(STANDARD QUANTITY-ACTUAL QUANTITY)X STANDARD PRICE
	STANDARD			ACTUAL
	UNIT	RATE	AMOUNT $	UNIT	RATE	AMOUNT $
DIECRCT MATERIAL	20000	11.4	228000	3900*5=19500	10.5	204,750
PUT THE FIGURES IN FORMULA
(20000-19500)11.4= 5700F
Standard Quantity is given per pound. So units are multiplied by standard Quantity.
so Actual Quantity= 3900*5=19500

43.

Budgeted Net Opearting Income in the month of December:
PARTICULARS	$
Budgeted Sale	210000
cost of goods sold 70% of sales	147000
gross profit	63000
Selling and Administrative Expenses	21000
Depreciation Expense	5000
Net Operating Income	37000