Veltri corporation is working on its direct

Shuck Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The direct labor budget indicates that 8,000 direct labor-hours will be required in May. The variable overhead rate is $1.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $100,350 per month, which includes depreciation of $9,000. All other fixed manufacturing overhead costs represent current cash flows. The May cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

$100,150

$109,150

$91,350

$8,800

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.9 hours of direct labor at the rate of $25.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.

The budgeted direct labor cost per unit of Product WZ would be:

$6.80 per unit

$25.00 per unit

$41.70 per unit

$72.50 per unit

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.3 hours of direct labor at the rate of $19.00 per direct labor-hour. The company plans to sell 42,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 640 and 140 units, respectively. Budgeted direct labor costs for June would be: (Do not round intermediate calculations.)

$1,813,550

$1,851,050

$1,832,300

$790,500

The manufacturing overhead budget at Cardera Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 8,000 direct labor-hours will be required in January. The variable overhead rate is $9.60 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $114,400 per month, which includes depreciation of $18,180. All other fixed manufacturing overhead costs represent current cash flows.

The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

$96,220

$76,800

$191,200

$173,020

Sparks Corporation has a cash balance of $16,500 on April 1. The company must maintain a minimum cash balance of $13,500. During April, expected cash receipts are $63,000. Cash disbursements during the month are expected to total $74,500. Ignoring interest payments, during April the company will need to borrow:

$5,000

$8,500

$13,500

$11,500

Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.78 direct labor-hours. The direct labor rate is $10.30 per direct labor-hour. The production budget calls for producing 7,000 units in October and 6,800 units in November. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,480 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?

$124,671.20

$112,888.00

$110,869.20

$111,075.20

The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information:

• Sales at $530,000, all for cash.

• Merchandise inventory on October 31 was $240,000.

• The cash balance November 1 was $26,000.

• Selling and administrative expenses are budgeted at $84,000 for November and are paid for in cash.

• Budgeted depreciation for November is $41,000.

• The planned merchandise inventory on November 30 is $270,000.

• The cost of goods sold is 70% of the selling price.

• All purchases are paid for in cash.

• There is no interest expense or income tax expense.

The budgeted cash receipts for November are:

$395,000

$530,000

$135,000

$571,000

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

Beginning Inventory

Ending Inventory

Finished goods (units)

20,000

70,000

Raw material (grams)

50,000

40,000

Each unit of finished goods requires 2 grams of raw material.

If the company plans to sell 550,000 units during the year, the number of units it would have to manufacture during the year would be:

600,000 units

550,000 units

500,000 units

620,000 units

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 3,400 tenant-days, but its actual level of activity was 3,460 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

—

$34.30

Wages and salaries

$2,300

$7.30

Food and supplies

1,300

13.80

Facility expenses

7,800

2.80

Administrative expenses

6,300

0.40

Total expenses

$17,700

$24.30

Actual results for September:

Revenue

$115,625

Wages and salaries

$28,530

Food and supplies

$49,580

Facility expenses

$16,500

Administrative expenses

$7,093

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:

$2,378 U

$2,978 U

$2,978 F

$2,378 F

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 3,800 tenant-days, but its actual level of activity was 3,830 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

—

$34.70

Wages and salaries

$2,700

$7.70

Food and supplies

1,700

14.20

Facility expenses

8,200

3.20

Administrative expenses

6,700

0.20

Total expenses

$19,300

$25.30

Actual results for September:

Revenue

$120,321

Wages and salaries

$28,570

Food and supplies

$56,975

Facility expenses

$19,989

Administrative expenses

$7,097

The spending variance for Food and supplies in September would be closest to:

$1,315 F

$889 U

$889 F

$1,315 U

Gourley Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 3,400 client-visits, but its actual level of activity was 3,310 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

Fixed element per month

Variable element per client-visit

Revenue

—

$39.40

Personnel expenses

$35,400

$10.60

Medical supplies

1,400

7.40

Occupancy expenses

8,400

1.40

Administrative expenses

5,400

0.5

Total expenses

$50,600

$19.90

The activity variance for administrative expenses in August would be closest to:

$105 F

$45 F

$105 U

$45 U

Thomasson Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. The cost formula for plane operating costs is $36,320 per month plus $2,074 per flight plus $1 per passenger. The company expected its activity in April to be 92 flights and 242 passengers, but the actual activity was 91 flights and 247 passengers. The actual cost for plane operating costs in April was $225,110. The activity variance for plane operating costs in April would be closest to:

$2,260 F

$2,260 U

$2,069 U

$2,069 F

Gourley Clinic uses client-visits as its measure of activity. During August, the clinic budgeted for 3,200 client-visits, but its actual level of activity was 3,150 client-visits. The clinic has provided the following data concerning the formulas to be used in its budgeting:

Fixed element per month

Variable element per client-visit

Revenue

—

$39.00

Personnel expenses

$35,000

$10.20

Medical supplies

1,000

7.00

Occupancy expenses

8,000

1.00

Administrative expenses

5,000

.10

Total expenses

$49,000

$18.30

The activity variance for personnel expenses in August would be closest to:

$510 F

$510 U

$2,950 U

$2,950 F

Galante 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 May, Kennel budgeted for 3,300 tenant-days, but its actual level of activity was 3,280 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:

Fixed element per month

Variable element per tenant-day

Revenue

—

$29.80

Wages and salaries

$2,300

$5.80

Food and supplies

500

10.60

Facility expenses

7,300

2.80

Administrative expenses

7,100

0.40

Total expenses

$17,200

$19.60

Actual results for May:

Revenue

$107,080

Wages and salaries

$23,430

Food and supplies

$36,783

Facility expenses

$19,180

Administrative expenses

$9,126

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 May would be closest to:

$2,305 F

$2,101 F

$2,305 U

$2,101 U

Paradiso Medical Clinic measures its activity in terms of patient-visits. Last month, the budgeted level of activity was 1,130 patient-visits and the actual level of activity was 1,120 patient-visits. The cost formula for administrative expenses is $3.70 per patient-visit plus $20,500 per month. The actual administrative expense was $21,400. In the clinic's flexible budget performance report for last month, the spending variance for administrative expenses was:

$3,244 F

$1,270 U

$37 F

$3,281 F

Cadavieco Detailing's cost formula for its materials and supplies is $1,910 per month plus $10 per vehicle. For the month of November, the company planned for activity of 86 vehicles, but the actual level of activity was 51 vehicles. The actual materials and supplies for the month was $2,430.

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

$340 F

$350 U

$350 F

$340 U

Galante 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 May, Kennel budgeted for 5,100 tenant-days, but its actual level of activity was 5,120 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:

Data used in budgeting:

Fixed element per month

Variable element per tenant-day

Revenue

—

$31.60

Wages and salaries

$4,100

$7.60

Food and supplies

700

12.40

Facility expenses

9,100

4.60

Administrative expenses

8,900

0.40

Total expenses

$22,800

$25.00

Actual results for May:

Revenue

$108,880

Wages and salaries

$23,610

Food and supplies

$36,801

Facility expenses

$19,360

Administrative expenses

$9,162

The net operating income in the flexible budget for May would be closest to:

$19,947

$19,853

$10,992

$10,860

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 5,500 tenant-days, but its actual level of activity was 5,560 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

—

$36.00

Wages and salaries

$2,700

$9.40

Food and supplies

1,900

15.90

Facility expenses

8,300

4.90

Administrative expenses

6,800

0.30

Total expenses

$19,700

$30.50

Actual results for September:

Revenue

$179,235

Wages and salaries

$28,740

Food and supplies

$89,785

Facility expenses

$35,875

Administrative expenses

$7,114

The spending variance for facility expenses in September would be closest to:

$625 F

$331 U

$331 F

$625 U

Galante 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 May, Kennel budgeted for 4,800 tenant-days, but its actual level of activity was 4,780 tenant-days. Kennel has provided the following data concerning the formulas used in its budgeting and its actual results for May:

Data used in budgeting:

Fixed element per month

Variable element per tenant-day

Revenue

—

$31.30

Wages and salaries

$3,800

$7.30

Food and supplies

400

12.10

Facility expenses

8,800

4.30

Administrative expenses

8,600

0.10

Total expenses

$21,600

$23.80

Actual results for May:

Revenue

$108,580

Wages and salaries

$23,580

Food and supplies

$36,798

Facility expenses

$19,330

Administrative expenses

$9,156

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

$5,316 F

$150 U

$150 F

$5,316 U

Cadavieco Detailing's cost formula for its materials and supplies is $2,080 per month plus $14 per vehicle. For the month of November, the company planned for activity of 88 vehicles, but the actual level of activity was 48 vehicles. The actual materials and supplies for the month was $2,570

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

$182 F

$182 U

$742 F

$742 U

The management of Freshwater Corporation is considering dropping product C11B. Data from the company's accounting system appear below:

Sales

$932,000

Variable expenses

$410,000

Fixed manufacturing expenses

$346,000

Fixed selling and administrative expenses

$253,000

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $212,000 of the fixed manufacturing expenses and $123,000 of the fixed selling and administrative expenses are avoidable if product C11B is discontinued.

What would be the effect on the company's overall net operating income if product C11B were dropped?

Overall net operating income would decrease by $187,000.

Overall net operating income would increase by $77,000.

Overall net operating income would decrease by $77,000.

Overall net operating income would increase by $187,000.

Tawstir Corporation has 600 obsolete personal computers that are carried in inventory at a total cost of $864,000. If these computers are upgraded at a total cost of $200,000, they can be sold for a total of $260,000. As an alternative, the computers can be sold in their present condition for $40,000.

Suppose the selling price of the upgraded computers has not been set. At what selling price per unit would the company be as well off upgrading the computers as if it just sold the computers in their present condition?

$100

$452

$400

$210

Tawstir Corporation has 500 obsolete personal computers that are carried in inventory at a total cost of $720,000. If these computers are upgraded at a total cost of $120,000, they can be sold for a total of $180,000. As an alternative, the computers can be sold in their present condition for $50,000.

What is the net advantage or disadvantage to the company from upgrading the computers rather than selling them in their present condition?

$130,000 advantage

$10,000 advantage

$680,000 disadvantage

$60,000 advantage

Gwinnett Barbecue Sauce Corporation manufactures a specialty barbecue sauce. Gwinnett has the capacity to manufacture and sell 14,000 cases of sauce each year but is currently only manufacturing and selling 12,600. The following costs relate to annual operations at 12,600 cases:

Total Cost

Variable manufacturing cost

$151,200

Fixed manufacturing cost

$53,000

Variable selling and administrative cost

$50,400

Fixed selling and administrative cost

$35,000

Gwinnett normally sells its sauce for $30 per case. A local school district is interested in purchasing Gwinnett's excess capacity of 1,400 cases of sauce but only if they can get the sauce for $15 per case. This special order would not affect regular sales or total fixed costs or variable costs per unit. If this special order is accepted, Gwinnett's profits for the year will:

increase by $840

decrease by $1,400

decrease by $12,600

decrease by $7,000

The management of Heider Corporation is considering dropping product H58S. Data from the company's accounting system appear below:

Sales

$980,000

Variable expenses

$402,000

Fixed manufacturing expenses

$384,000

Fixed selling and administrative expenses

$264,000

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $261,000 of the fixed manufacturing expenses and $222,000 of the fixed selling and administrative expenses are avoidable if product H58S is discontinued. What would be the effect on the company's overall net operating income if product H58S were dropped?

Overall net operating income would decrease by $70,000.

Overall net operating income would increase by $95,000.

Overall net operating income would increase by $70,000.

Overall net operating income would decrease by $95,000.

Eley Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 54,000 units per month is as follows:

Direct materials

$49.60

Direct labor

$9.50

Variable manufacturing overhead

$2.50

Fixed manufacturing overhead

$20.10

Variable selling & administrative expense

$4.60

Fixed selling & administrative expense

$22

The normal selling price of the product is $114.10 per unit.

An order has been received from an overseas customer for 3,400 units to be delivered this month at a special discounted price. This order would have no effect on the company's normal sales and would not change the total amount of the company's fixed costs. The variable selling and administrative expense would be $2.60 less per unit on this order than on normal sales.

Direct labor is a variable cost in this company.

Suppose there is ample idle capacity to produce the units required by the overseas customer and the special discounted price on the special order is $90.40 per unit. By how much would this special order increase (decrease) the company's net operating income for the month?

$(72,000)

$22,780

$91,120

$(60,860)

Fabio Corporation is considering eliminating a department that has a contribution margin of $34,000 and $68,000 in fixed costs. Of the fixed costs, $17,000 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:

a decrease of $34,000.

an increase of $34,000.

a decrease of $17,000.

an increase of $17,000

Part A42 is used by Elgin Corporation to make one of its products. A total of 25,500 units of this part are produced and used every year. The company's Accounting Department reports the following costs of producing the part at this level of activity:

Per Unit

Direct materials

$9.40

Direct labor

$10.80

Variable manufacturing overhead

$7.40

Supervisor's salary

$7.50

Depreciation of special equipment

$9.90

Allocated general overhead

$7.20

An outside supplier has offered to make the part and sell it to the company for $38.00 each. If this offer is accepted, the supervisor's salary and all of the variable costs, including the direct labor, can be avoided. The special equipment used to make the part was purchased many years ago and has no salvage value or other use. The allocated general overhead represents fixed costs of the entire company, none of which would be avoided if the part were purchased instead of produced internally. In addition, the space used to make part A42 could be used to make more of one of the company's other products, generating an additional segment margin of $32,500 per year for that product. What would be the impact on the company's overall net operating income of buying part A42 from the outside supplier?

Netoperating income would decrease by $41,450 per year.

Net operating income would decrease by $281,150 per year.

Net operating income would increase by $32,500 per year.

Net operating income would decrease by $344,250 per year.

Two products, IF and RI, emerge from a joint process. Product IF has been allocated $20,300 of the total joint costs of $41,000. A total of 2,700 units of product IF are produced from the joint process. Product IF can be sold at the split-off point for $12 per unit, or it can be processed further for an additional total cost of $10,700 and then sold for $14 per unit. If product IF is processed further and sold, what would be the effect on the overall profit of the company compared with sale in its unprocessed form directly after the split-off point?

$28,400 less profit

$5,300 less profit

$27,100 more profit

$15,000 more profit

Coakley Beet Processors, Inc., processes sugar beets in batches. A batch of sugar beets costs $46 to buy from farmers and $20 to crush in the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the crushing process. The beet fiber can be sold as is for $22 or processed further for $14 to make the end product industrial fiber that is sold for $34. The beet juice can be sold as is for $42 or processed further for $40 to make the end product refined sugar that is sold for $80. How much profit (loss) does the company make by processing the intermediate product beet juice into refined sugar rather than selling it as is?

$(29)

$(60)

$(2)

$(18)