Davis Corporation is preparing
its Manufacturing Overhead Budget for the fourth quarter of the year. The
budgeted variable factory overhead rate is $1.70 per direct labor-hour; the
budgeted fixed factory overhead is $116,000 per month, of which $30,000 is
factory depreciation.
84. If
the budgeted direct labor time for October is 8,000 hours, then the total
budgeted factory overhead for October is:
A) $129,600
B) $43,600
C) $99,600
D) $86,000
Ans: A AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy
Solution:
Total budgeted factory overhead =
Variable manufacturing overhead + Fixed manufacturing overhead = (8,000 × $1.70) + $116,000 = $13,600 + $116,000
= $129,600
85. If
the budgeted direct labor time for November is 7,000 hours, then the total
budgeted cash disbursements for November must be:
A) $41,900
B) $127,900
C) $86,000
D) $97,900
Ans: D AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium
Solution:
Cash disbursements = Variable
manufacturing overhead + Fixed manufacturing overhead − Depreciation = (7,000 ×
$1.70) + $116,000 − $30,000
= $11,900 + $116,000 − $30,000 =
$97,900
86. If
the budgeted direct labor time for December is 4,000 hours, then the predetermined
factory overhead per direct labor-hour for December would be:
A) $9.20
B) $30.70
C) $23.20
D) $1.70
Ans: B AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Medium
Solution:
Predetermined factory overhead rate
= Variable overhead rate per direct labor hour + Fixed factory overhead rate
per hour = $1.70 + ($116,000 ÷ 4,000)
= $1.70 + $29 = $30.70
Use the following to answer
questions 87-88:
Cartier Inc. bases its
manufacturing overhead budget on budgeted direct labor-hours. The variable
overhead rate is $5.80 per direct labor-hour. The company's budgeted fixed
manufacturing overhead is $39,930 per month, which includes depreciation of
$12,870. All other fixed manufacturing overhead costs represent current cash
flows. The direct labor budget indicates that 3,300 direct labor-hours will be
required in April.
87. The
April cash disbursements for manufacturing overhead on the manufacturing
overhead budget should be:
A) $59,070
B) $46,200
C) $27,060
D) $19,140
Ans: B AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy
Solution:
Cash disbursements for April =
(Variable overhead rate × Number of direct-labor hours) + (Fixed manufacturing
overhead less depreciation)
= ($5.80 × 3,300) + ($39,930 −
$12,870) = $19,140 + $27,060 = $46,200
88. The
company recomputes its predetermined overhead rate every month. The
predetermined overhead rate for April should be:
A) $14.00
B) $5.80
C) $17.90
D) $12.10
Ans: C AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy
Solution:
Predetermined factory overhead rate
= Variable overhead rate per direct labor hour + Fixed factory overhead rate
per hour = $5.80 + ($39,930 ÷ 3,300)
= $5.80 + $12.10 = $17.90
Use the following to answer
questions 89-90:
Avril Inc. bases its
manufacturing overhead budget on budgeted direct labor-hours. The variable
overhead rate is $4.60 per direct labor-hour. The company's budgeted fixed
manufacturing overhead is $54,080 per month, which includes depreciation of
$3,840. All other fixed manufacturing overhead costs represent current cash
flows. The direct labor budget indicates that 3,200 direct labor-hours will be
required in October.
89. The
October cash disbursements for manufacturing overhead on the manufacturing
overhead budget should be:
A) $68,800
B) $64,960
C) $14,720
D) $50,240
Ans: B AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy
Solution:
Cash disbursements for October =
(Variable overhead rate × Number of direct-labor hours) + (Fixed manufacturing
overhead less depreciation)
= ($4.60 × 3,200) + ($54,080 −
$3,840) = $14,720 + $50,240 = $64,960
90. The
company recomputes its predetermined overhead rate every month. The
predetermined overhead rate for October should be:
A) $4.60
B) $21.50
C) $20.30
D) $16.90
Ans: B AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy
Solution:
Predetermined factory overhead rate
= Variable overhead rate per direct labor hour + Fixed factory overhead rate
per hour
= $4.60 + ($54,080 ÷ 3,200) = $4.60
+ $16.90 = $21.50
Use the following to answer
questions 91-92:
The manufacturing overhead
budget at Cardera Corporation is based on budgeted direct labor-hours. The
direct labor budget indicates that 2,300 direct labor-hours will be required in
January. The variable overhead rate is $1.00 per direct labor-hour. The company's
budgeted fixed manufacturing overhead is $28,060 per month, which includes
depreciation of $4,600. All other fixed manufacturing overhead costs represent
current cash flows.
91. The
company recomputes its predetermined overhead rate every month. The
predetermined overhead rate for January should be:
A) $1.00
B) $12.20
C) $11.20
D) $13.20
Ans: D AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy
Solution:
Predetermined factory overhead rate
= Variable overhead rate per direct labor hour + Fixed factory overhead rate
per hour
= $1 + ($28,060 ÷ 2,300) = $1 +
$12.20 = $13.20
92. The
January cash disbursements for manufacturing overhead on the manufacturing
overhead budget should be:
A) $30,360
B) $2,300
C) $23,460
D) $25,760
Ans: D AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy
Solution:
Cash disbursements for January =
(Variable overhead rate × Number of direct-labor hours) + (Fixed manufacturing
overhead less depreciation)
= (2,300 × $1) + ($28,060 − $4,600)
= $2,300 + $23,460 = $25,760
Use the following to answer
questions 93-94:
The manufacturing overhead
budget at Polich Corporation is based on budgeted direct labor-hours. The
direct labor budget indicates that 1,600 direct labor-hours will be required in
February. The variable overhead rate is $3.40 per direct labor-hour. The
company's budgeted fixed manufacturing overhead is $28,320 per month, which
includes depreciation of $3,680. All other fixed manufacturing overhead costs
represent current cash flows.
93. The
company recomputes its predetermined overhead rate every month. The
predetermined overhead rate for February should be:
A) $3.40
B) $21.10
C) $17.70
D) $18.80
Ans: B AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy
Solution:
Predetermined factory overhead rate
= Variable overhead rate per direct labor hour + Fixed factory overhead rate
per hour = $3.40 + ($28,320 ÷ 1,600)
= $3.40 + $17.70 = $21.10
94. The
February cash disbursements for manufacturing overhead on the manufacturing
overhead budget should be:
A) $24,640
B) $33,760
C) $30,080
D) $5,440
Ans: C AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 6 Level: Easy
Solution:
Cash disbursements for February =
(Variable overhead rate × Number of direct-labor hours) + (Fixed manufacturing
overhead less depreciation)
= (1,600 × $3.40) + ($28,320 −
$3,680) = $5,440 + $24,640 = $30,080
Use the following to answer
questions 95-97:
Porter Corporation makes and
sells a single product called a Yute. The company is in the process of
preparing its Selling and Administrative Expense Budget for the last quarter of
the year. The following budget data are available:
|
|
|
Variable
Cost Per Yute Sold
|
Monthly
Fixed Cost
|
|
|
Sales commissions.................................
|
$5.90
|
|
|
|
Shipping.................................................
|
$5.30
|
|
|
|
Advertising.............................................
|
$8.90
|
$32,000
|
|
|
Executive salaries...................................
|
|
$178,000
|
|
|
Depreciation on office equipment..........
|
|
$7,000
|
|
|
Other.......................................................
|
$0.60
|
$20,000
|
All of these expenses (except
depreciation) are paid in cash in the month they are incurred.
95. If
the company has budgeted to sell 14,000 Yutes in November, then the total
budgeted selling and administrative expenses for November would be:
A) $526,800
B) $289,800
C) $237,000
D) $519,800
Ans: A AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Medium
Solution:
Total budgeted selling and
administrative expenses = Variable cost + Fixed cost = [14,000 × ($5.90 + $5.30
+ $8.90 + $ 0.60)] + ($32,000 + $178,000 + $7,000 + $20,000) = (14,000 ×
$20.70) + $237,000 = $526,800
96. If
the company has budgeted to sell 12,000 Yutes in December, then the budgeted
total cash disbursements for selling and administrative expenses for December
would be:
A) $237,000
B) $485,400
C) $248,400
D) $478,400
Ans: D AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Medium
Solution:
Variable
cost per unit = $5.90 + $5.30 + $8.90 + $0.60 = $20.70
Fixed cost total = $32,000 +
$178,000 + $7,000 + $20,000 = $237,000
Cash disbursements for December =
(Variable selling and administrative cost × Number of direct-labor hours) +
(Fixed manufacturing overhead less depreciation)
= (12,000 × $20.70) + ($237,000 −
$7,000) = $248,400 + $230,000 = $478,400
97. If
the budgeted cash disbursements for selling and administrative expenses for
October total $518,520, then how many Yutes does the company plan to sell in
October?
A) 13,300
units
B) 14,100
units
C) 13,800
units
D) 13,600
units
Ans: D AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 7 Level: Hard
Solution:
($20.70 ×
Units sold) + $237,000 = $518,520
($20.70 × Units) = $518,520 −
$237,000
Units = $281,520 ÷ $20.70 = 13,600
Use the following to answer
questions 98-100:
The Bandeiras Company, a
merchandising firm, has budgeted its activity for December according to the
following information:
·
Sales at $550,000, all for
cash.
·
Merchandise inventory on
November 30 was $300,000.
·
Budgeted depreciation for
December is $35,000.
·
The cash balance at
December 1 was $25,000.
·
Selling and administrative
expenses are budgeted at $60,000 for December and are paid in cash.
·
The planned merchandise
inventory on December 31 is $270,000.
·
The invoice cost for
merchandise purchases represents 75% of the sales price. All purchases are paid
for in cash.
98. The
budgeted cash receipts for December are:
A) $412,500
B) $137,500
C) $585,000
D) $550,000
Ans: D AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Easy
Solution:
Since all sales are on a cash basis,
the cash receipts for December will be equal to the sales in December of
$550,000.
99. The
budgeted cash disbursements for December are:
A) $382,500
B) $442,500
C) $472,500
D) $477,500
Ans: B AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 8 Level: Hard
Solution:
Purchases =
Ending inventory + Cost of goods sold − Beginning inventory
= $270,000 + ($550,000 × 75%) −
$300,000 = $382,500
Cash disbursements = Purchases +
Selling and administrative expenses
= $382,500 + $60,000 = $442,500
100. The
budgeted net income for December is:
A) $107,500
B) $137,500
C) $42,500
D) $77,500
Ans: C AACSB: Analytic
AICPA BB: Critical Thinking AICPA FN: Reporting LO: 9 Level: Hard
Solution:
|
|
Sales.........................................................................
|
$550,000
|
|
|
Cost of goods sold ($550,000 × 75%)......................
|
412,500
|
|
|
Gross margin............................................................
|
137,500
|
|
|
Depreciation expense...............................................
|
35,000
|
|
|
Selling and administrative expense..........................
|
60,000
|
|
|
Net income...............................................................
|
$ 42,500
|
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