Cost and Management Accounting -II - Work Sheet and Assignment Questions

Questions submitted as assignment are : 1,3,11 & 12

Question1

I. Royal Company is preparing budgets for the quarter ending June 30th. Budgeted sales for
the next five months are:
April 20,000 units
May 50,000 units
June 30,000 units
July 25,000 units
August 15,000 units
II. The selling price is $10 per unit.
III. All sales are on account. Royal’s collection pattern is:
70% collected in the month of sale,
30% collected in the month following sale,
IV. Account Receivable on March 31 was 30,000 and collected in April,
V. the management at Royal Company wants ending inventory to be equal to 20% of the
following month’s budgeted sales in units. On March 31st, 4,000 units were on hand.
VI. At Royal Company, five pounds of material are required per unit of product and
Management wants materials on hand at the end of each month equal to 10% of the
following month’s production. On March 31, 13,000 pounds of material are on hand.
Material cost is $0.40 per pound.

VII. Expected Cash Disbursement for Materials

Required:
a) Prepare sales budget for the quarter ending June 30
b) Production budget for the quarter ending June 30
c) Prepare DM purchase budget for the quarter ending June 30
d) DL Cost budget for the quarter ending June 30
e) Cash collection schedule for the quarter ending June 30
f) cash payment schedule for the quarter ending June 30
g) Budgeted gross profit for the quarter ending June 30

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Question2

MB Corporation manufactures and sells plastic boomerang. Budgeted boomerang sales (in
units) for the upcoming 6 months are as follows:
July Aug. Sept. Oct. Nov Dec
Expected unit sales ......... 12,000 15,000 10,000 8,000 7,000 11,000
 7 units of direct material are needed to produce every boomerang.
 As per the company's inventory policy for DM, at the end of the month, DM on hand
should be 25% of the next month's production requirements.
 The firm also likes to maintain a finished goods inventory equal to 10% of the next
month's estimated sales.
Required:
a) Compute Production budget in units for each month
b) Compute the units of DM to be purchased in each month
Question3
The following information is budgeted for a Supply Company for next quarter:
April May June
Sales $110,000 $130,000 $180,000
Merchandise purchases $85,000 $92,000 $105,000
Selling and admin. expenses $50,000 $50,000
$50,000
 Account receivable on February28, was $ 50,000 and Cash Balance at the end of
February is $20,000
 All sales are on credit. The collection patter is 40 % are collected in the month of sale
and 60 % in the month following the sale
 All Merchandise purchases are on credit and payment is paid in full the month
following the month of purchase.
 The selling and administrative expenses above include $8,000 of depreciation of each
month . All other selling and administrative expenses are paid as incurred.
 The firm wants to maintain a cash balance of $15,000. Any amount below this can be
borrowed from a local bank as needed at 10% interest rate
Required:
Prepare cash budget for the quarter

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 Question 4
The following materials standards have been established for a particular raw material used in
the company's sole product:
 Standard quantity per unit of output.......... 1.0 pound
 Standard price............................................ $16.60 per pound
The following data pertain to actual operations concerning the product for the last month:
 Actual materials purchased ....................... 2,200 pounds
 Actual cost of materials purchased............ $34,650
 Actual materials used in production.......... 1,900 pounds
 Actual production ............................................. 2,100 units
Required:
Compute material cost price and quantity variance for DMC of the month?
Compute price variance for material purchased during the month

Question 5
The following labor standards have been established for a particular product:
 Standard labor-hours per unit of output ............. 8.0 hours
 Standard labor rate.............................................. $13.10 per hour

The following data pertain to operations concerning the product for the last month:
 Actual hours worked ............ 4,000 hours
 Actual total labor cost........... $53,000
 Actual output ........................ 400 units
Required: Compute labor cost price and quantity variance

Question 6
The following information pertains to Bates Company's direct labor for March:
Standard direct labor-hours ....................... 21,000
Actual direct labor-hours........................... 20,000
Favorable direct labor price variance .......... $8,400
Standard direct labor price per hour ............ $6.30
Required:
a) Compute actual direct labor cost for March
b) Compute budgeted direct labor cost for March
c) Compute direct labor cost variance
d) compute labor cost price and quantity variance

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 Question 7
The standard cost card of a particular product specifies that it requires 4.5 direct labor-hours at
$12.80 per direct labor-hour. During March, 2,300 units of the product were produced and
direct labor cost of $128,300 were incurred. A total of 11,700 direct labor-hours were worked.
The direct labor price and efficiency variances for the month were?
Question 8
A Foods Company uses a standard cost system to collect costs related to the production of its
product . The materials standards for each product produced are 0.8 ounces of DM at a
standard cost of $2.30 per ounce. During the month of June, the company purchased 75,000
ounces of DM at a total cost of $171,000. and used 64,000 of these ounces to produce
71,500units of food(product)
What is company's labor cost variance for the month of June?
What is company's materials price variance of labor cost of the month of June?
What is company's materials quantity variance of labor cost of the month of June?
What is company's materials price variance for materials purchased in the month of June?
Question 9
ECC Chemical Company uses a standard cost system to collect costs related to the production
of its “bowling ball” fruitcakes. The direct labor standard for each fruitcake is 1.25 hours at a
standard cost of $11.00 per hour. During the month of November, Holiday's fruitcake
production used 9,820 direct labor hours at a total direct labor cost of $106,547. This resulted
in production of 8,500 fruitcakes for November.
What is ECC's labor rate variance for November?
What is ECC's labor efficiency variance for November?
Question 10
A Company uses standard costing and has established the following direct material and direct
labor standards for each unit of the single product it makes:
 Direct materials ........... 4 gallons at $8 per gallon
 Direct labor.................. 1 hour at $16 per hour
During July, the company made 6,000 units of product and the following costs:
 Direct materials purchased......... 26,800 gallons at $8.20 per gallon
 Direct materials used.................. 25,200 gallons
 Direct labor used ........................ 5,600 hours at $15.30 per hour
a) The material price variance for July DMC and DM purchase were:
b) The materials quantity variance for July was:
c) The labor rate variance for July was
d) The labor efficiency variance for July was

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 Question 11

A Corporation used the following data to evaluate their current operating system. The
company actual and budgeted selling price is $20 per unit.
Actual Budgeted
Units sold 46,000units 45,000 units
Variable costs $225,400 $216,000
Fixed costs $47,500 $50,000

I. Prepare static budget performance report

Question 12

The actual information and static budget performance for the month of September are
summarized below
Actual Results Static Budget
Sales volume (in units) 10,000 12,500
Sales revenues $500,000 $625,000
Variable costs 256,000 $300,000
Contribution margin 244,000 $ 325,000
Fixed costs 229,000 $225,000
Operating profit $ 15,000 $ 100,000
I. Prepare flexible budget
II. Prepare fixable budget performance report
III. Compute flexible budget and sales volume variance for sales, VC, FC and operating
Profit

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Question 13

Compute the value of letter A to E?

Question 14
A company developed standard costs for direct material and direct labor. The following
standard costs for one of its major products is summarized below
Budgeted quantity Budgeted price
Direct materials 0.10 pounds $30 per pound
Direct labor 0.05 hours $15 per hour

During June, the firm produced and sold 10,000 units using 980 pounds of direct
materials at a cost per pound of $32 and 500 direct labor-hours at a rate of $15.25 per
hour
Required: Compute
I. Direct material flexible-budget variance
II. Direct labor flexible-budget variance
III. Direct material price variance
IV. Direct material quantity variance
V. Direct labor price variance

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 VI. Direct labor efficiency variance

Question 15
 Define what transfer price is
 Explain why transfer price is used among divisions or branches of a company including its
advantage and disadvantage
 List the Transfer Price alternatives and compare the alternatives