Question 1: Napa Manufacturing\'s static budget at 8,000 units of production inc

Question

Question 1:

Napa Manufacturing's static budget at 8,000 units of production includes $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $23,000. At 9,000 units of production, a flexible budget would show:

A. Variable and fixed costs totaling $75,375
B. Variable costs of $49,500 and $23,000 of fixed costs.
C. Variable costs of $49,500 and $25,875 of fixed costs.
D. Variable costs of $44,000 and $23,000 of fixed costs

Question 2:

Incurring actual indirect factory wages in excess of budgets amounts for actual production results in a:

A. labor rate variance
B. material quantity variance
C. variable overhead variance
D. volume variance

Question 3:

What is the purpose of the sales budget report?

A. To assess whether the company is profitable or not
B. To identify differences between planned and actual and take corrective action if necessary.
C. To determine why sales goals were met or not met
D. To control the cost of selling products in a company

Question 4:

A department has budgeted monthly manufacturing overhead cost of $40,000 plus $5 per direct labor hour. The flexible budget report reflects $120,000 for total budgeted manufacturing cost for the month. What is the actual level of activity achieved during the month?

A. 24,000 direct labor hours
B. Can not be determined
C. 32,000 direct labor hours
D. 16,000 direct labor hours

Explanation / Answer

Question 1: 44,000/8000 = $5.50 per unit for DL. 9,000*5.5 = 49,500. Answer: B. Variable costs of $49,500 and $23,000 of fixed costs. Question 2: Incurring actual indirect factory wages in excess of budgets amounts for actual production results in a: Answer: C. variable overhead variance Question 3: What is the purpose of the sales budget report? C. To determine why sales goals were met or not met Question 4: 120,000 – 40,000 = 80,000. 80,000/5 =16,000 Answer: D. 16,000 direct labor hours

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