Question 18 Fantastic Tool Company (USA Division) makes all sorts of moldings. I

ID: 2441812 • Letter: Q

Question

Question 18

Fantastic Tool Company (USA Division) makes all sorts of moldings. Its standard quantity of material allowed is 1 foot of wood per 1 foot of molding at a standard price of $2.00 per foot. During August, it purchased 500,000 feet of wood at a cost of $1.90 per foot, which produced only 499,000 feet of molding. Calculate the materials price variance and the materials usage variance, respectively.

Answers

$50,000 F and $2,000 U

$49,900 U and $2,000 F

$50,000 F and $1,900 U

$49,900 F and $1,900 U

Question 19

Figure 9-8.
The Fantastic Tool Company (Mexico Division) produced 100,000 saw blades during the year. It took 2 hours of labor per blade at a rate of $5.50 per hour. However, its standard labor rate is $5.00. Its labor efficiency variance was a favorable $55,000.

Refer to Figure 9-8. What is Fantastic’s standard hours allowed for a volume of 100,000 blades?

Answer

211,000 hours

189,000 hours

210,000 hours

190,000 hours

Question 20

Refer to Figure 9-8. What is Fantastic’s labor rate variance?

Answer

$96,875 U

$105,500 U

$100,000 U

$95,000 U

Question 21

Figure 9-10.
Lawn Professionals Corporation parent company of Fantastic Tools wants to produce a new lawnmower. he financial data is as follows:

Target price: $350
Target profit: $75
Estimated cost given current product and process designs: $300
Other information:
(1) Through reverse engineering, Lawn Professionals found a design improvement that would save $20 per unit.
(2) It also found that it could purchase a similar component of a different brand at a lower price, which would save $10 per unit.

Refer to Figure 9-10. What is Lawn Professionals’ target cost?

Answer

$275

$300

$225

$350

Question 22

Figure 9-10.
Lawn Professionals Corporation parent company of Fantastic Tools wants to produce a new lawnmower. The financial data is as follows:

Target price: $350
Target profit: $75
Estimated cost given current product and process designs: $300
Other information:
(1) Through reverse engineering, Lawn Professionals found a design improvement that would save $20 per unit.
(2) It also found that it could purchase a similar component of a different brand at a lower price, which would save $10 per unit.

Refer to Figure 9-10. What is Lawn Professionals’ new expected profit?

Answer

$75

$105

$80

$50

Question 23

Which budget is used to assess managerial efficiency?

Answer

operational budget

capital budget

static budget

flexible budget

cash budget

Question 24

The major differences between activity-based budgeting and traditional budgeting are found in

Answer

the materials and labor categories.

the sales and production budgets.

the cash budget.

the overhead and selling and administrative categories.

none of these

Answers

$50,000 F and $2,000 U

$49,900 U and $2,000 F

$50,000 F and $1,900 U

$49,900 F and $1,900 U

Explanation / Answer

Question 18 Fantastic Tool Company (USA Division) makes all sorts of moldings. Its standard quantity of material allowed is 1 foot of wood per 1 foot of molding at a standard price of $2.00 per foot. During August, it purchased 500,000 feet of wood at a cost of $1.90 per foot, which produced only 499,000 feet of molding. Calculate the materials price variance and the materials usage variance, respectively. Answers $50,000 F and $2,000 U Question 19 The Fantastic Tool Company (Mexico Division) produced 100,000 saw blades during the year. It took 2 hours of labor per blade at a rate of $5.50 per hour. However, its standard labor rate is $5.00. Its labor efficiency variance was a favorable $55,000. Refer to Figure 9-8. What is Fantastic’s standard hours allowed for a volume of 100,000 blades? Answer 211,000 hours Question 20 The Fantastic Tool Company (Mexico Division) produced 100,000 saw blades during the year. It took 2 hours of labor per blade at a rate of $5.50 per hour. However, its standard labor rate is $5.00. Its labor efficiency variance was a favorable $55,000. Refer to Figure 9-8. What is Fantastic’s labor rate variance? Answer $100,000 U Question 21 Lawn Professionals Corporation parent company of Fantastic Tools wants to produce a new lawnmower. he financial data is as follows: Target price: $350 Target profit: $75 Estimated cost given current product and process designs: $300 Other information: (1) Through reverse engineering, Lawn Professionals found a design improvement that would save $20 per unit. (2) It also found that it could purchase a similar component of a different brand at a lower price, which would save $10 per unit. Refer to Figure 9-10. What is Lawn Professionals’ target cost? Answer $275 Question 22 Lawn Professionals Corporation parent company of Fantastic Tools wants to produce a new lawnmower. The financial data is as follows: Target price: $350 Target profit: $75 Estimated cost given current product and process designs: $300 Other information: (1) Through reverse engineering, Lawn Professionals found a design improvement that would save $20 per unit. (2) It also found that it could purchase a similar component of a different brand at a lower price, which would save $10 per unit. Refer to Figure 9-10. What is Lawn Professionals’ new expected profit? Answer $80 Question 23 Which budget is used to assess managerial efficiency? Answer operational budget Question 24 The major differences between activity-based budgeting and traditional budgeting are found in Answer the materials and labor categories.

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