1 Hettinger Hospital bases its budgets on patient-visits. The hospital\'s static

Question

1 Hettinger Hospital bases its budgets on patient-visits. The hospital's static budget for March appears below: Budgeted number of patient-visits 9,000 Budgeted variable costs: Supplies (@ $9.10 per patient-visit) $ 81,900 Laundry (@ $8.80 per patient-visit) 79,200 Total variable cost 161,100 Budgeted fixed costs: Wages and salaries 99,700 Occupancy costs 107,700 Total fixed cost 207,400 Total cost $368,500 The total variable cost at the activity level of 9,100 patient-visits per month should be:

a. $161,100

b. $209,730

c. $162,890

d. $207,400

2. Epley Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 2.0 pounds $7.00 per pound Direct labor 1.0 hours $18.00 per hour Variable overhead 1.0 hours $2.00 per hour In July the company produced 4,700 units using 10,160 pounds of the direct material and 2,140 direct labor-hours. During the month, the company purchased 10,730 pounds of the direct material at a cost of $76,610. The actual direct labor cost was $38,252 and the actual variable overhead cost was $11,953. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for July is: rev: 11_06_2015_QC_CS-32670 a.$1,360 U

b. $1,500 F

c. $5,320 U

d. $1,360 F

3. Epley Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 8.5 pounds $8.0 per pound Direct labor 0.8 hours $29.00 per hour Variable overhead 0.8 hours $13.50 per hour In July the company produced 3,400 units using 13,600 pounds of the direct material and 2,840 direct labor-hours. During the month, the company purchased 14,360 pounds of the direct material at a cost of $35,100. The actual direct labor cost was $81,951 and the actual variable overhead cost was $36,748. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The labor rate variance for July is:

a. $409 F

b. $409 U

c. $3,071 U

d. $3,071 F

Pardoe, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product: Standard Quantity Standard Price or Rate Standard Cost Direct materials 2.0 pounds $7.75 per pound $15.50 Direct labor 0.5 hours $25 per hour $12.5 Variable manufacturing overhead 0.5 hours $6.00 per hour $3.00 During March, the following activity was recorded by the company: • The company produced 6,800 units during the month. • A total of 17,100 pounds of material were purchased at a cost of $47,880. • There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,420 pounds of material remained in the warehouse. • During March, 3,600 direct labor-hours were worked at a rate of $25.50 per hour. • Variable manufacturing overhead costs during March totaled $11,000. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for March is: a.$84,645 U

b. $27,280 F

c. $27,280 U

d. $84,645 F

Explanation / Answer

1) Calculate total variable cost on 9100 Activity level :

Total variable cost = (9.1+8.8)*9100 = 162890

So answer is c) $162890

2) Material quantity variance = (4700*2-10160)*7 = 5320 U

So answer is c) 5320 U

3) Labour rate variance = (29*2840-81951) = 409 F

So answer is a) $409 F

4) Material price variance = (7.75*17100-47880) = 84645 F

So answer is d) $84645 F

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