Test 2 Extra Review Problems

Test 2 Extra Review Problems - 1. Wilson Furniture has...

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1. Wilson Furniture has adopted an ABC system. Wilson produces two products: tables and chairs. The following information relates to fiscal year 20x8. Tables Chairs Number of Units Produced 1,000 4,000 Number of Setups 25 15 Number of Machine Hours 500 700 Setup costs vary with the number of setups. Total Setup cost is $6,000. How much setup cost should be allocated to each product line under the company’s ABC system? Tables Chairs A. $2,500 $3,500 B. $3,000 $3,000 C. $3,750 $2,250 D. $1,200 $4,800 2. Bennett Company’s standards for Product A are based on the use of highly skilled labor. During July, due to unexpected demand, Bennett was forced to use labor that is less skilled. As a result, what would be the likely variances? Labor Rate Variance Labor Efficiency Variance A. Unfavorable Favorable B. Unfavorable Unfavorable C. Favorable Favorable D. Favorable Unfavorable 3. Jacob Company budgeted production of 4,100 units for the month of April. The following information is available for April for Jacob Company: Standard: Material: 2 pounds per unit at $3.50 per pound Labor: 4 hours per unit at $8.25 per hour Actual: Material purchased and used – 7,800 pounds at $3.40 per pound Direct labor – 16,700 hours at $8.30 per hour Units produced in April – 4,000 What is the material price variance? A. $1,500 F C. $780 U B. $700 F D. $780 F 4. A major purpose of budgeting is to A. decide which products to produce. B. identify managers that should be promoted. C. identify potential problems in achieving goals and objectives. D. communicate past results to stakeholders. 5. Which of the following statements about budgets is false? A. Participatory budgets reduce budget slack. B. Participatory budgets are accepted by subordinates more readily than imposed budgets. C. Imposed budgets usually require less time to prepare than participatory budgets. D. Imposed budgets increase the likelihood that the budget will reflect the organization’s strategic goals.
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6. In what order are the following budgets prepared? I. Cash Budget II. Sales Budget III. Selling Expense Budget IV. Production Budget A. I, II, III, IV B. II, I, IV, III C. I, II, IV, III D. II, IV, III, I 7. Purdy Company has prepared the following sales budget for the first quarter of 20x9. Based on past experience the company estimates that 20% of each month’s sales are cash sales and the other 80% are credit sales. Also, history indicates that 40% of credit sales are collected during the month of sale, 50% in
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Test 2 Extra Review Problems - 1. Wilson Furniture has...

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