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Standard costs
A. May show past cost experience
B. Help establish expected future costs
C. Are the budgeted cost per unit in the present
D. All of these
Ideal standards
A. Are rigorous but attainable
B. Are the standards generally used in a master budget
C. Reflect optimal performance under perfect operating conditions
D. Will always motivate employees to achieve the maximum output
Nance Company is considering buying a machine for $90,000 with an estimated life of ten years and no salvage value. The straight-line method of depreciation will be used. The machine is expected to generate net income of $6,000 each year. The cash payback on this investment is
A. 15 years
B. 10 years
C. 6 years
D. 3 years
The standard number of hours that should have been worked for the output attained is 6,000 direct labor hours and the actual number of direct labor hours worked was 6,300. If the direct labor price variance was $3,150 unfavorable, and the standard rate of pay was $9 per direct labor hour, what was the actual rate of pay for direct labor?
A. $8.50 per direct labor hour
B. $7.50 per direct labor hour
C. $9.50 per direct labor hour
D. $9.00 per direct labor hour
The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1,200 units, the actual direct labor cost was $32,000 for 2,000 direct labor hours worked, the total direct labor variance is
A. $1,200 unfavorable
B. $4,000 favorable
C. $2,500 unfavorable
D. $4,000 unfavorable
If a plant is operating at full capacity and receives a one-time opportunity to accept an order at a special price below its usual price, then
A. Only variable costs are relevant
B. Fixed costs are not relevant
C. The order will likely be accepted
D. The order will likely be rejected
The formula for the materials quantity variance is
A. (SQ × AP) – (SQ × SP)
B. (AQ × AP) – (AQ × SP)
C. (AQ × SP) – (SQ × SP)
D. (AQ × AP) – (SQ × SP)
The per-unit standards for direct labor are 1.5 direct labor hours at $12 per hour. If in producing 2,400 units, the actual direct labor cost was $36,800 for 3,000 direct labor hours worked, the total direct labor variance is
A. $1,920 unfavorable
B. $6,400 favorable
C. $4,000 unfavorable
D. $6,400 unfavorable
The formula for the materials price variance is
A. (AQ × SP) – (SQ × SP)
B. (AQ × AP) – (AQ × SP)
C. (AQ × AP) – (SQ × SP)
D. (AQ × SP) – (SQ × AP)
Ruiz Company’s contribution margin is $4 per unit for Product A and $5 for Product B. Product A requires 2 machine hours and Product B requires 4 machine hours. How much is the contribution margin per unit of limited resource for each product?
A B
a. $4.00 $5.00
b. $2.00 $1.25
c. $1.25 $2.00
d. $2.50 $1.00
A. A
B. B
C. C
D. D
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Baden Company manufactures a product with a unit variable cost of $50 and a unit sales price of $88. Fixed manufacturing costs were $240,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $70 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows
A. Income would decrease by $4,000
B. Income would increase by $4,000
C. Income would increase by $70,000
D. Income would increase by $20,000
ToolTime has a standard of 2 hours of labor per unit at $12 per hour. In producing 2,000 units, ToolTime used 3,850 hours of labor at a total cost of $46,970. ToolTime’s labor quantity variance is
A. $770 U
B. $1,030 F
C. $1,800 F
D. $1,930 F
Opportunity cost must be considered in decisions involving
A. Budgeting
B. Financial accounting
C. CVP analysis
D. Resources that have alternative uses
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