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Unformatted text preview: Chapter 9 Practice Exam 1. The following are budgeted data: Each unit requires 0.75 hours of direct labor at a cost of $6.50 per hour. What is the cost of direct labor for May? A) $73,125 B) $82,875 C) $63,375 D) $78,000 Feedback: Budgeted direct labor cost = Units produced x Direct labor-hours per unit x Budgeted direct labor cost per unit = 16,000 x 0.75 direct labor-hours x $6.50 per direct labor-hour = $78,000 2. LDG Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.0 hours of direct labor at the rate of $10.50 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: A) $12.50 B) $10.50 C) $21.00 D) $5.25 Feedback: Budgeted direct labor cost per unit = Direct labor-hours per unit x Direct labor rate = 2.0 x $10.50 = $21.00 3. Marple Company's budgeted production in units and budgeted raw materials purchases over the next three months are given below: Two pounds of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. The company is expected to have 36,000 pounds of raw materials on hand on January 1. Budgeted production for February should be: A) 105,000 units B) 82,500 units C) 150,000 units D) 75,000 units Feedback: Budgeted raw material purchases for February (in pounds) = [30% x (100,000 x 2 lbs)] + (February production x 2 lbs) - [30% x (February production x 2 lbs) 165,000 = 60,000 + (1.4 x February production) February production = 75,000 units 4. The excess or deficiency of cash available over disbursements on the cash budget is calculated as follows: A) The beginning balance less the expected cash receipts less the expected cash disbursements. B) The cash available less the expected cash receipts plus the expected cash disbursements. C) The beginning balance plus the expected cash receipts less the expected cash disbursements. D) None of these. 5. The Waverly Company has budgeted sales for next year as follows: The ending inventory of finished goods for each quarter should equal 25% of the next quarter's budgeted sales in units. The finished goods inventory at the start of the year is 3,000 units. Scheduled production for the third quarter should be: A) 17,500 B) 18,500 C) 22,000 D) 13,500 Feedback: Units produced = Ending inventory + Units sold - Beginning inventory = (16,000 x 25%) + 18,000 - (18,000 x 25%) = 4,000 + 18,000 - 4,500 = 17,500 6. The manufacturing overhead budget at Ferrucci Corporation is based on budgeted direct labor- hours. The direct labor budget indicates that 1,600 direct labor-hours will be required in December. The variable overhead rate is $4.40 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $25,120 per month, which includes depreciation of $5,440. All other fixed manufacturing overhead costs represent current cash flows. The December cash other fixed manufacturing overhead costs represent current cash flows....
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