1. Kibodeaux Corporation makes a product with the following standard costs:
The company budgeted for production of 3,300 units in June, but actual production was 3,400 units. The company used 33,240 liters of direct material and 320 direct labor hours to produce this output. The company purchased 35,900 liters of the direct material at $4.90 per liter. The actual direct labor rate was $22.70 per hour.
The direct materials purchase variance is computed when the materials are purchased.
The materials quantity variance for June is:
2. The direct material purchases variance is computed when the materials are purchase.
The materials price variance for June is:
3. The direct material purchases variance is computed when the materials are purchased.
The labor efficiency variance for June i:
4. The direct material purchases variance is computed when the materials are purchased
The labor rate variance for June is:
5. The Cox company used standard costing. The following data are available for April:
The standard quantity of material allowed for April production is:
6. Product R19N has been considered a drag on profits at Buzzeo Corporation for some time and management is considering Discounting the product altogether. Data from the company’s accounting appear to the below:
In the company’s accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $49,000 of the fixed manufacturing expenses and $30,000 of the fixed selling and administrative expenses are avoidable if product R19N is discontinued. What would be the effect on the company’s overall net operating income if product R19N were dropped?
7. Lusk Company produces and sells 15,000 units of product A each month. The selling price of product A is $20 per unit, and variable expenses are $14 per unit. A study has been made concerning whether product A should be discontinued. The study shows that $70,000 of the $1,000 in fixed expenses charged to product A would continue even if the product was discontinued. These data indicate that if product A is discontinued, the company’s overall net operating income would:
8. Part I51 is used in one of price corporation’s products. The company makes 18,000 units of this part each year. The company’s Accounting Department reports the following costs of producing the part at this level of activity:
An outside supplier has offered to produce this part and sell it to the company for $15.80 each. If this offered is accepted, the supervisor’s salary and all of the variable costs, including direct labor, can be avoided. The special equipment used to make the part was purchased many year ago and has no salvage value or other use. The allocated general overhead represent fixed costs of the entire company. If the outside supplier’s offer were accepted, only $26,000 of these allocated general overhead costs would be avoided.
If management decides to buy part I51 from the outside supplier rather than to continue making the part what would be the annual impact on the company’s overall net operating income?