MCQ’S-The budget or schedule that provides necessary input data for the direct-labor budget is the….

1.
The budget or schedule that provides necessary
input data for the direct-labor budget is the
A. production budget. B. raw materials purchases budget.
C. schedule of cash collections. D. cash budget.

2. 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. The direct labor hours are
11,000 and the direct labor rate is $10.50. Budgeted direct-labor costs for
June would be A. $234,150. B. $117,075. C.
$462,000. D. $455,700.

3-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 Variable element
Per month per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results
for January:
Revenue $93,408- Personnel expenses –
$46,251-Medical supplies $19,348
Occupancy expenses $9,508 – Administrative
expenses $4,772
3. The activity variance for administrative
expenses in January would be closest to
A. $8 U. B. $12 F. C. $8 F. D. $12 U.

4-Cole Laboratories makes and sells a lawn
fertilizer called Fastgro. The company has developed standard costs for one bag
of Fastgro as follows:

Standard Standard Cost
Quantity per bag
Direct material 20 pounds $8.00
Direct labor 0.1 hours $1.10
Variable overhead 0.1 hours $0.40
The 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 pounds
4. The labor rate variance for January is A.
$585 F. B. $475 U. C. $585 U. D.
$475 F.

5. 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’s calculated based on the sales
budget and the desired ending inventory.
B. It details the required raw materials
purchases.
C. It summarizes the costs of producing units
for the budget period.
D. It details the required direct-labor hours.

6-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 Variable element
per month per client-visit

Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70

Actual results
for December:
Revenue $96,299- Personnel expenses $51,009-
Medical supplies $17,425
Occupancy expenses $9,240- Administrative
expenses $3,239
6. The activity variance for personnel expenses
in December would be closest to
A. $71 U. B. $2,361 U. C. $71 F.
D. $2,361 F.

7-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 Variable element
per month per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results
for January:
Revenue $93,408– Personnel expenses $46,251–
Medical supplies $19,348
Occupancy expenses $9,508– Administrative
expenses $4,772
7. The activity variance for personnel expenses
in January would be closest to
A. $261 U. B. $661 F. C. $261 F. D. $661 U.

8. Manufacturing Cycle Efficiency (MCE) is
computed as
A. Value-Added Time divided by Delivery Cycle
Time.
B. Process Time divided by Delivery Cycle Time.
C. Throughput Time divided by Delivery Cycle
Time.
D. Value-Added Time divided by
Throughput Time.

9-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 Variable element
per month per client-visit

Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70

Actual results
for December:
Revenue $96,299—-Personnel expenses
$51,009—-Medical supplies $17,425
Occupancy expenses $9,240–Administrative expenses
$3,239
9. The personnel expenses in the planning budget
for December would be closest to
A. $51,147. B. $51,009. C. $53,299. D. $53,370.

10- Cole Laboratories makes and sells a lawn
fertilizer called Fastgro. The company has developed standard costs for one bag
of Fastgro as follows:

Standard Standard Cost
Quantity per bag
Direct material 20 pounds $8.00
Direct labor 0.1 hours $1.10
Variable overhead 0.1 hours $0.40
The 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 pounds
10. The materials quantity variance for January
is A. $300 U. B. $800 U. C. $300 F.D. $750F.

11-Cole Laboratories makes and sells a lawn
fertilizer called Fastgro. The company has developed standard costs for one bag
of Fastgro as follows:

Standard Standard Cost
Quantity per bag
Direct material 20 pounds $8.00
Direct labor 0.1 hours $1.10
Variable overhead 0.1 hours $0.40

The 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 pounds
11. The total variance (both rate and efficiency)
for variable overhead for January is
A. $125 F. B. $40 F. C. $85 F. D. $100 U.

12. 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 operating assets B. An increase in sales
C. A reduction in expenses D. An increase in net
operating income

13. 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 units. September 14,500 units.
October 15,500 units
November 12,600 units December 11,900 units
The 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 is
A. $33,840. B. $40,970.C.
$48,200. D. $42,300.

14. The LFM Company makes and sells a single
product, Product T. Each unit of Product T requires 1.3 hours of direct labor
at a rate of $9.10 per direct-labor hour. LFM Company needs to prepare a
direct-labor budget for the second quarter of next year. The budgeted
direct-labor cost per unit of Product T would be. A. $11.83.
B. $7.00. C. $9.10. D. $10.40.

15. 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. $16.00 B. $24.00 C. $21.40 D. $17.60

16. 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 Variable element
per month per unit

Revenue ___-___ $35.40
Direct labor 0 $3.30
Direct materials 0 15.90
Manufacturing overhead 49,200 1.20
Selling and
Administrative expenses 26,600 0.10
Total expenses $75,800 $20.50
Actual results for April:
Revenue $254,146. – Direct labor $24,722.-Direct
materials $116,496
Manufacturing overhead $59,608. – Selling and
administrative expenses $26,494
The 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
to. A. $6,144 U. B. $6,144 F. C. $6,740 F. D. $6,740 U.

17-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 Variable element
per month per client-visit

Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results for December:
Revenue $96,299 – Personnel expenses $51,009 –
Medical supplies $17,425
Occupancy expenses $9,240- Administrative
expenses $3,239
17. The spending variance for medical supplies
in December would be closest to
A. $680 F. B. $680 U. C. $725 F. D. $725 U.

18-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.
18. The budgeted net income for November is A.
$135,000. B. $50,000. C. $75,000.
D. $68,000.

19. The Charade Company is preparing its
Manufacturing Overhead budget for the fourth quarter of the year. The budgeted
variable factory overhead is $5.00 per direct-labor hour; the budgeted fixed
factory overhead is $75,000 per month, of which $15,000 is factory
depreciation. If the budgeted direct-labor time for December is 8,000 hours,
then total budgeted factory overhead per direct-labor hour (rounded) is
A. $16.25. B. $12.50. C. $14.38.
D. $9.38.

20. The cash budget must be prepared before you
can complete the
A. raw materials purchases budget.
B. schedule of cash disbursements.
C. production budget.
D. budgeted balance sheet.