1. Dana, Inc. recently completed 40,000 units of a product that was expected to
ID: 2466573 • Letter: 1
Question
1. Dana, Inc. recently completed 40,000 units of a product that was expected to consume 6 pounds of direct material per finished unit. The standard price of the direct material was $7.50 per pound. If the firm purchased and consumed 246,000 pounds in manufacturing (cost = $1,785,600), the direct-material quantity variance would be
$59,400F.
$59,400U.
$45,000F.
None of these.
$45,000U.
2. Orion recently reported sales revenues of $747,000, a total contribution margin of $279,000, and fixed costs of $210,000. If sales volume amounted to 9,000 units, the company's variable cost per unit must have been:
$34.
$94.
an amount other than those above.
$14.
$52.
3. Yellow Dot, Inc. sells a single product for $15. Variable costs are $5 per unit and fixed costs total $130,000 at a volume level of 7,500 units. What dollar sales level would Yellow Dot have to achieve to earn a target profit of $220,000?
$525,000.
$325,000.
$425,000.
$112,500.
$625,000.
4. The following data relate to product no. 89 of Des Moines Corporation:
Direct material standard: 3 square feet at $2.90 per square foot
Direct material purchased: 29,000 square feet at $3.20 per square foot
Direct material consumed: 28,000 square feet
Manufacturing activity: 9,200 units completed
Assume that the company computes variances at the earliest point in time.
The direct-material quantity variance is:
$1,160U.
$4,360F.
$1,160F.
$1,280U.
$1,280F.
The direct-material price variance is:
$8,900F.
$8,900U.
$8,500U.
$8,700U.
$8,700F.
Explanation / Answer
1)correct option is "E" -4500U
[Material quantity varinace = SR(AQ-SQ)]
= 7.5 [246000- (40000*6]) = 7.5 [246000-240000] = 7.5*6000 = 45000
2) CORRect option is "E" - 52
[variable cost pe runit = (747000-279000)/9000= 52]
3)correct option is "A" -525000
CM ratio = (15-5)/15 = 10/15= .6667
$ sales required to achieve target profit = (Fixed cost +desired profit) /CM ratio
= [130000+220000]/.6667
= $ 524974 [approx to 52500 ,difference of $26 due to decimal in CM ratio]
4)Quantity variance =SR [AQ-SQ)
= 2.9 [28000 - (9200*3)]
= 2.9 *[28000 - 27600 ] = 1160 U
Correct option is "A"
Price variance = AQ[AP-SP]
= 29000 [3.2-2.9]
= 8700 U
Correct option is "D"
Material price will be calculated at purchase time as it is mention variance is calculated at earliest point of time .
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