# Managerial Accounting Quiz 3

Managerial Accounting Quiz 3

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TB MC Qu. 10-42 Lynne Catering uses two measures of activity, jobs…

Lynne Catering uses two measures of activity, jobs and meals, in the cost formulas in its budgets and performance reports. The cost formula for catering supplies is \$708 per month plus \$99 per job plus \$26 per meal. A typical job involves serving a number of meals to guests at a corporate function or at a host’s home. The company expected its activity in June to be 26 jobs and 84 meals, but the actual activity was 32 jobs and 75 meals. The actual cost for catering supplies in June was \$6030. The catering supplies in the flexible budget for June would be closest to:

\$3282

\$5,826

\$5,907

\$84

2.

TB Problem Qu. 10-287 Cicchetti Corporation uses customers…

Cicchetti Corporation uses customers served as its measure of activity. The following report compares the planning budget to the actual operating results for the month of December:

 Cicchetti Corporation Comparison of  Actual Results to Planning Budget For the Month Ended December 31 Actual Results Planning Budget Variances Customers served 41,000 37,500 Revenue (\$5.2q) \$ 214,350 \$ 195,000 \$ 19,350 F Expenses: Wages and salaries (\$37,800 + \$1.7q) 111,300 101,550 9,750 U Supplies (\$0.9q) 36,150 33,750 2,400 U Insurance (\$14,800) 15,400 14,800 600 U Miscellaneous expense (\$7,800 + \$0.4q) 26,300 22,800 3,500 U Total expense 189,150 172,900 16,250 U Net operating income \$ 25,200 \$ 22,100 \$ 3,100 F

Required:

Prepare the company’s flexible budget performance report for December. Select each variance as favorable (F), unfavorable (U) or “None”.

3.

TB MC Qu. 08-115 (Ignore income taxes in this problem.) The management…

(Ignore income taxes in this problem.) The management of Mashiah Corporation is considering the purchase of a machine that would cost \$325,000, would last for 4 years, and would have no salvage value. The machine would reduce labor and other costs by \$109,000 per year. The company requires a minimum pretax return of  11% on all investment projects.
Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determine the appropriate discount factor(s) using tables.

The net present value of the proposed project is closest to:

\$357,000

\$49,985

\$13,118

\$140,568

5.

TB Problem Qu. 11-170 Zee Corporation has developed the following…

Zee Corporation has developed the following cost standards for the production of its leather backpacks:

 Standard Cost Per Backpack Leather (0.7 yards × \$38 per yard) \$26.60 Direct labor (1.0 hours × \$23.00 per hour) \$23.00 Variable overhead (1.0 hours × \$26.40 per hour) \$26.40

Variable overhead at Zee is applied on the basis of direct labor hours. The actual results for last month were as follows:

 Number of backpacks produced 6,000 Direct labor hours incurred 5,460 Yards of leather purchased 5,320 Yards of leather used in production 4,690 Cost of leather purchased \$196,840 Direct labor cost \$122,031 Variable overhead cost \$146,055

The direct materials purchases variance is computed when the materials are purchased.

Required:

Compute the following variances for Zee.

1. Materials price variance.

6.

TB MC Qu. 08-101 (Ignore income taxes in this problem.) Overland Corporation…

(Ignore income taxes in this problem.) Overland Corporation has gathered the following data on a proposed investment project:

Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determine the appropriate discount factor(s) using tables.

 Investment required in equipment \$ 680,000 Annual cash inflows \$ 66,000 Salvage value of equipment \$ 0 Life of the investment 20 years Discount rate 7 %

The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.

The internal rate of return on the investment is closest to:
7%

9%

5%

3%

7.

TB MC Qu. 12-49 Fruchter Corporation keeps careful track …

Fruchter Corporation keeps careful track of the time required to fill orders. The times recorded for a particular order appear below:

 Hours Move time 31.2 Wait time 9.5 Queue time 0.7 Process time 2.7 Inspection time 7.4

The throughput time was:

rev: 08_01_2016_QC_CS-56553

42.0 hours

38.6 hours

51.5 hours

12.9 hours

8.

TB MC Qu. 12-87 The West Division of Frede Corporation …

The West Division of Frede Corporation had average operating assets of \$684,000 and net operating income of \$150,000 in March. The minimum required rate of return for performance evaluation purposes is 23%.
What was the West Division’s minimum required return in March?

\$157,320

\$34,500

\$150,000

\$191,820

9.

TB MC Qu. 11-150 Novelli Corporation makes a product whose variable…

Novelli Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is 1.8 hours per unit. The variable overhead rate standard is \$13.00 per hour. In September, the company produced 1,250 units using 2,240 direct labor-hours. The actual variable overhead rate was \$14.70 per hour.

The variable overhead efficiency variance for September is:

\$147 U

\$130 F

\$130 U

\$147 F

10.

TB MC Qu. 12-65 Last year the Uptown Division of Gorcen Enterprise…

Last year the Uptown Division of Gorcen Enterprises had sales of \$397,575 and a net operating income of \$28,215. The average operating assets at Uptown last year amounted to \$128,250.

Last year at Uptown the return on investment was: (Do not round intermediate calculations.)

14%

32%

10%

22%