29. The following materials standards have been established for a pa Standard qu

Question

29. The following materials standards have been established for a pa Standard quantity per unit of output 6.8 meters $14.40 per meter The following d ata pertain to operations concerning the product for the last month Actual materials purchased... Actual cost of materials purchased Actual materials used in production. Actual output. 4.400 meters .. $60,500 3,800 meters 400 units What is the materials price variance for the month? A. $14,850 U B. S8,250 U C. $8,640 U D. $2,860 F 30. T he Carlquist Company makes and sells a product called Product K. Each unit of as Product K sells for $24 dollars and has a unit variable cost of $18. The company h budgeted the following data for November: . Sales of $1,152,200, all in cash. . A cash balance on November 1 of $48,000. Cash disbursements (other than interest) during November A minimum cash balance on November 30 of $60,000. f necessary, the company will borrow cash from a bank. The borrowing will be in multiples of $1,000 and will bear interest at 2% per month. All borrowing will take place at the beginning of the month. The November interest will be paid in cash during November The amount of cash needed to be borrowed on November 1 to cover all cash disbursements and to obtain the desired November 30 cash balance is: A. $20,000 B. $21,000 C. $37,000 D. $38,000

Explanation / Answer

Solution 29 - (D) Calculation of Material price variance

Standard Price = $14.4 Per metre

Actual Price = ($60500/4400) = $13.75

Actual Material Purchased = 4400 Metre

Material Price Variance =

(Standard cost - Actual cost) * Actual units of material

($14.4 - $13.75) * 4400 = $2860 F

Solution 30 - (B) Cash Budget

Note : Surplus cash is $40200. Cash balance required is $60000. Borrowing can be done in multiples of $1000 only. Hence company should borrow atleast $21000 to make balance to $61200 ($40200 + $21000) to cover Interest expenses also.

Material Price Variance =

(Standard cost - Actual cost) * Actual units of material

($14.4 - $13.75) * 4400 = $2860 F

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