Question

choose the correct answer

1.ABC Corporation is in the process of preparing its annual budget. The following beginning and ending raw material inventory levels are planned for the year.  

	Beginning Inventory	Ending Inventory
Raw material (grams)	5,000 grams	4,000 grams

Each unit of finished goods requires 2 grams of raw material and production of 50,000 units of goods are planned.

How much of the raw material should the company purchase during the year?

A. 99,000 grams

B. 100,000 grams

C. 101,000 grams

D. 109,000 grams

2.. The spending variance is the difference between:

A.The static budget and actual results

B.The static budget and the flexible budget

C.The ideal budget and the static budget

D.The flexible budget and the actual results

3. ABC Company has the following data for December:

	Budget		Actual
Number of Client Visits	3,500 visits		3,480 visits
	Fixed element per month	Variable element per client visit	Total
Revenue	—	$35.50	$124,700
Personnel expenses	$27,500	$11.50	$72,050
Administrative expenses	$18,500	$6.60	$45,515
Total expenses	$46,000	$18.10	$117,565

The activity variance for net operating income in December would be closest to:

A.348 F

B.348 U

C.7,765 F

D.7,765 U

4. The following labor standards have been established for a particular product:

Standard labor-hours per unit of output        3 hours

Standard labor rate                                      $15 per hour

The following data pertain to operations concerning the product for the last month:

Actual hours worked                                    6,500 hours

Actual total labor cost                                  $96,200

Actual output                                              2,000 units

What is the labor rate variance for the month?

A. $7,400 U

B. $7,400 F

C. $6,200 U

D. $1,300 F

Answer 1

1
Raw materials to be purchased during the year =(50000*2)[phone]= 99000 grams
Option A is correct
2
The spending variance is the difference between The flexible budget and the actual results
Option D is correct
3
Net operating income planning budget = 3500*(35.5-18.1)-46000= $14900
Net operating income flexible budget = 3480*(35.5-18.1)-46000= $14552
Activity variance for net operating income = 14900-14552 = $348 U
Option B is correct
4
Labor rate variance = 96200-(6500*15)= $1300 F
Option D is correct