31 as follows: Information on Pruitt Company\'s direct-material costs for the mo

Question

31 as follows: Information on Pruitt Company's direct-material costs for the month of July 2005 was 30,000 units Actual quantity purchased Actual unit purchase price Materials purchase-price variance S2.75 $1,500 24,000 units -unfavorable (based on purchases) Standard quantity allowed for actual production Actual quantity used 22,000 units For July 2005 there was a favorable direct-materials quantity variance of A. $7,950. B. S5,500. C. $5,400. D. S5,600 32. Direct labor standards at Cepeda Manufacturing Corporation allow 5 d rect labor- hours for every unit produced. The standard direct labor rate is $12.00 per hour. During the month of February, Cepeda incurred 35,000 direct labor-hours and recor ded a S15,000 favorable labor efficiency variance. How many units did Cepeda produce d uring February? A. 6,750 B. 7,250 C. 33,750 D. 36,250 33. Scales Corporation has received a request for a special order of 6,000 units of produet Y45 for $13.70 each. Product Y45's unit product cost is $11.50, determined as follows Direct materials. $2.50 1.90 2.30 4.80 $11.50 Variable manufacturing overhead Fixed manufacturing overhead Unit product o Direct labor is a variable cost. The special order would have no effect on the company's ixed manufacturing overhead costs. The customer would like modifications made to product Y45 that would increase the variable costs by $8.10 per unit and that would require an investment of $20,000 in special molds that would have no salvage value. This special order would have no effect on the company's other sales. The company has ample spare capacity for producing the special order. If the special order is accepted, the company's overall net operating income would increase (decrease) by: A. (S26,600) B. S13,200

Explanation / Answer

31. option c. 5400 is correct

given price variance = 1500

hence for 30000 units actual paid of 82500(30000*2.75) is 1500 more than standard price, hence standard price for 30000 units= 82500-1500= 81000, per unit standard cost will be= 81000/30000= 2.70

standard allows 24000 units where as only 22000 units used, hence 2000 units saving is there and the amount will be units*standard rate= 2000*2.7= 5400

32. option b. 7250 is correct

standard hours saved= efficiency variance/ standard rate= 15000/12= 1250 hours.

since actual hours taken is 35000 and by including savings of 1250 standard hours required will be= 36250

as 5 hours is required for 1 unit, total units produced= standard hours required for actual production/standard hours per unit= 36250/5= 7250 units produced

35. option A.950 Favourable is correct

33. option A. is correct

34. option c is correct

since the department is giving 50000 contribution margin and the avoidable fixed costs are only 40000 the department is contribution 10000(50000-40000) towards overall profit of the comapny. by discontinuing the department will result in 10000 less contribution to the profit of the company

Standard Hours Standard rate Standard cost Actual Hours Actual rate Actual cost a b c=a*b d e f=d*e SH SR SC AH AR AC 6,000.00 9.50 57,000.00 5,900.00 9.25 54,575.00 [4800*1.25] [54575/5900] Labor cost variance SC-AC 57000-54575 2,425.00 2425 F Labor rate/Price variance AH*(SR-AR) 5900*(9.5-9.25) 1,475.00 1475 F Labor efficiency variance SR*(SH-AH) 9.5*(6000-5900) 950.00 950 F

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