Question

1. Given the following performance report, determine the total amount of variance and if it is favorable or unfavorable. Actual costs: Maintenance is $50,000; Power is $80,000; and Indirect Labor is $10,000. Budgeted costs: Maintenance is $45,000; Power is 81,000; and Indirect Labor is $8,000.

a.

6,000 U

b.

6,000 F

c.

12,000 U

d.12,000F

2. We prepare a budget based on manufacturing 20,000 chairs this month. Budgeted costs are: Fixed manufacturing costs = $50,000 per month; Variable manufacturing costs = $10 per chair. However; we actually produced 21,000 chairs during March. How much is the flexible budget for March?

a.

$260,000

b.

$50,000

c.

$250,000

d.

$200,000

3. Please determine the total amount of Direct Labor in our Budget for January and February together given the following information: Direct labor per unit = .25 hours; Direct labor rate is $30 per hour; Expected number of units to produce in January is 20,000 units and in February is 15,000 units.

a. $200,000

b. $235,000

c. $262,500

d. $285,000

Answer 1

1)			actual	flexible	variance
	maintenance		50,000	45,000	5000	U
	power		80,000	81,000	1000	F
	indirect labor		10,000	8,000	2000	U
	total		140,000	134,000	6000	U
		answer)	option a
			6000	U
2)	Flexible budget
	50000+21000*10
	260,000
	answer ) option a
3)				jan	feb
	expected units			20,000	15000
	direct labor hr per unit			0.25	0.25
	total hrs			5000	3750
	cost per hr			30	30
	total direct labor cost			150000	112500	262500
		answer)	optionc	C