Roye kennel uses tenant days as its measure of activity

1. Cadavieco Detailing's cost formula for its materials and supplies is $1,860 per month plus $5 per vehicle. For the month of November, the company planned for activity of 81 vehicles, but the actual level of activity was 46 vehicles. The actual materials and supplies for the month was $2,150.

The spending variance for materials and supplies in November would be closest to:

$60 U

$115 F

$60 F

$115 U

2. Craft Company produces a single product. Last year, the company had a net operating income of $96,860 using absorption costing and $82,300 using variable costing. The fixed manufacturing overhead cost was $13 per unit. There were no beginning inventories. If 23,800 units were produced last year, then sales last year were:

24,920 units

22,680 units

9,240 units

38,360 units

3. While fixed costs should not be affected by a change in the level of activity within the relevant range, they may change for other reasons.

True

False

4. Roye Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During September, Kennel budgeted for 3,200 tenant-days, but its actual level of activity was 3,250 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for September:

Data used in budgeting:

Fixed element per month

Variable element per tenant-day

  Revenue

—

$34.10

  Wages and salaries

$2,100

$7.10

  Expendables

1,100

13.60

  Facility expenses

7,600

2.60

  Administrative expenses

6,100

0.20

  Total expenses

$16,900

$23.50

Actual results for September:

  Revenue

$107,351

  Wages and salaries

$28,510

  Expendables

$46,025

  Facility expenses

$15,500

  Administrative expenses

$7,091

The spending variance for expendables in September would be closest to:

$1,405 U

$725 U

$1,405 F

$725 F

5. Roye Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During September, Kennel budgeted for 5,300 tenant-days, but its actual level of activity was 5,340 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for September:

Data used in budgeting:

Fixed element per month

Variable element per tenant-day

  Revenue

—

$35.80

  Wages and salaries

$2,500

$9.20

  Expendables

1,700

15.70

  Facility expenses

8,100

4.70

  Administrative expenses

6,600

0.50

  Total expenses

$18,900

$30.10

Actual results for September:

  Revenue

$172,453

  Wages and salaries

$28,720

  Expendables

$85,025

  Facility expenses

$33,430

  Administrative expenses

$7,112

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 September would be closest to:

$6,856 U

$6,856 F

$6,628 F

$6,628 U

6. Diskind Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 7,200 units, but its actual level of activity was 7,150 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:

Data used in budgeting:

Fixed element per month

Variable element per tenant-day

  Revenue

—

$34.70

  Direct labor

$0

$6.70

  Direct materials

0

13.20

  Manufacturing overhead

42,000

2.20

  Selling and administrative expenses

26,000

0.70

  Total expenses

$68,000

$22.80

Actual results for October:

  Revenue

$249,300

  Direct labor

$48,110

  Direct materials

$95,680

  Manufacturing overhead

$46,000

  Selling and administrative expenses

$30,520

The direct labor in the planning budget for October would be closest to:

$48,110

$47,905

$48,240

$48,210

7. The Grand Company has budgeted departmental costs and operating activity in its four departments for the coming year as follows:

Service Department

Operating Department

Custodial

Repair

Production

Finishing

  Departmental costs

$ 6,450

$ 7,010

$ 50,000

$ 60,000

  Square feet

200

1,600

4,200

  Number of repair requests

240

100

The company does not distinguish between fixed and variable service department costs. Custodial costs are allocated on the basis of square feet occupied. Repair costs are allocated on the basis of the number of repair requests. Assume Custodial costs are allocated first.

Assume Grand uses the step-down allocation method. After all allocations, how much of the company's total overhead cost will be charged to the Finishing Department for the coming year? (Round your answer to the nearest dollar amount.)

$71,757

$66,640

$67,391

$64,515

8. Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

•

Sales are budgeted at $310,000 for November, $330,000 for December, and $320,000 for January.

•

Collections are expected to be 60% in the month of sale, 39% in the month following the sale, and 1% uncollectible.

•

The cost of goods sold is 65% of sales.

•

The company would like to maintain ending merchandise inventories equal to 55% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.

•

Other monthly expenses to be paid in cash are $22,800.

•

Monthly depreciation is $20,700.

•

Ignore taxes.

   Expected cash collections in December are:

$120,900

$330,000

$198,000

$318,900