Part I: Marguerite, Inc., expects to manufacture and sell 20,000 pool cues for $12.00 each. Direct materials costs are $2.00, direct manufacturing labor is $4.00, and manufacturing overhead is $0.80 per pool cue. The following inventory levels apply to 20x4:
Beginning inventory Ending inventory
Direct materials 24,000 units 24,000 units
Work-in-process inventory 0 units 0 units
Finished goods inventory 2,000 units 2,500 units
Q1. On the 20x4 budgeted income statement, what amount will be reported for sales?
a. $246,000
b. $240,000
c. $312,000
d. $318,000
Q2. How many pool cues need to be produced in 20x4?
a. 22,500 cues
b. 22,000 cues
c. 20,500 cues
d. 19,500 cues
Q3. What are the 20x4 budgeted costs for direct materials, direct manufacturing labor, and manufacturing overhead, respectively?
a. $0; $96,000; $19,200
b. $39,000; $78,000; $15,600
c. $80,000; $40,000; $16,000
d. $41,000; $82,000; $16,400
Part II: Shimon Corporation manufactures industrial-sized water coolers and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information pertains to the company's manufacturing overhead data.
Budgeted output units 15,000 units
Budgeted machine-hours 5,000 hours
Budgeted variable manufacturing overhead costs for 15,000 units $161,250
Actual output units produced 22,000 units
Actual machine-hours used 7,200 hours
Actual variable manufacturing overhead costs $242,000
Q1. What is the budgeted variable overhead cost rate per output unit?
a. $10.75
b. $11.00
c. $32.25
d. $48.40
Q2. What is the flexible-budget amount for variable manufacturing overhead?
a. $165,000
b. $236,500
c. $242,000
d. none of the above
Q3. What is the flexible-budget variance for variable manufacturing overhead?
a. $5,500 favorable
b. $5,500 unfavorable
c. $4,300 favorable
d. none of the above