Question

11. Haskell Co.'s budget has 12,000 units of production that includes $40,000 for variable direct labor and S12,000 for variable indirect material cost. Total fixed costs are $25,000. At 15,000 units of production, a flexible budget would show a. variable costs of $65,000 and $25,000 of fixed costs b. variable costs of $50,000 and $37,000 of fixed costs c. variable costs of $52,000 and $25,000 of fixed costs d. Total (variable and fixed) costs of $77,000 12. Below is budgeted production and sales information for Heston Company for the month of December: Product BH3 120,000 units 80,000 units 320,000 units 180,000 units Estimated beginning inventory Desired ending inventory East Region, budgeted sales West Region, budgeted sales Budgeted production units for product BH3 for December should be a. 540,000 units b. 460,000 units c. 500,000 units d. 700,000 units 13. If there were 150,000 pounds of direct materials in inventory on November 1, 2019; 80,000 pounds are desired for inventory on November 30, 2019, and 350,000 pounds are required for November production, how many pounds of direct materials should be purchased in November? a. 500,000 pounds b. 430,000 pounds c. 280,000 pounds d. 420,000 pounds 14. A power plant's flexible budget shows $1,084,000 for total factory overhead cost for the month. The total amount includes fixed factory overhead cost of $540,000. The power plant's variable costs were budgeted using a rate of $2.50 per machine hour. The actual level of activity that occurred during the month was a. 252,000 machine hours. b. 168,000 machine hours. c. 217,600 machine hours. d. 544,000 machine hours. 15. Duvall Co.'s product Z85 has budgeted production of 20,000 units in the year 2020. Each unit of Z85 uses 40 kg of Direct Material (DM) that costs $2.00 per kg. Duvall will start 2020 with zero (0) beginning DM inventory, but they want 2020 ending DM inventory to be 50,000 kg. How much will Duvall spend on Direct Materials for Z85 in 2020? a. $850,000 b. $1,600,000 c. $1,700,000 d. $800,000

Answer 1

Question 11

Budgeted costs for 12000 units:

Variable direct labor cost is $40,000 ( i.e., $40,000/12,000 units = $10/3 per unit)

Variable indirect material cost is $12,000 (i.e., $1 per unit)

Fixed cost is $25,000

Flexible budget for 15,000 units is as given below:

Variable direct labor cost (15,000units*$10/3) -           $50,000.00

Variable indirect material cost (15,000units *$1)               -           $15,000.00

Therefore total Variable cost is ($50,000+$15,000)           -           $65,000.00

And the fixed cost will never change so it is                     -           $25,000.00

So Option A is the correct answer that is Variable cost of $65,000 and $25,000 of Fixed cost

Question 12

Budgeted production units of product BH3 for December should be;

Production units = Total sales units + Closing Inventory - Opening Inventory

East Region, budgeted sales	320,000 units
Add: West region, budgeted sales	180,000 units
Add: Closing Inventory	80,000 units
Less: Opening Inventory	(120,000 units)
Production units	460,000 units

So Option B is the correct answer that is 460,000 units

Question 13:

The number of pounds of direct materials purchased during November month is:

Units purchased + opening inventory - units used in production = closing inventory

Therefore, Units purchased =     Units used in production + closing inventory – Opening Inventory

Units used going to use in production	350,000 units
Add: Closing Inventory on 30th November 2019	80,000 units
Less: Opening Inventory on 1st November 2019	(150,000 units)
Units require to purchase in November month	280,000 units

So, Option C is the correct answer that is 280,000 units

Question 14:

Actual level (in machine hours) of activity that occurred during the month is:

Total budgeted fixed cost     -           $1,084,000.00

Less: Fixed Cost -           ($540,000.00)

Balance is total variable cost   -           $544,000.00

Per machine hour variable cost is $2.50

Therefore, the number of machine-hours used is 217,600 hours ($544,000/$2.5)

So, Option C   is the correct answer that is 217,600 machine hours

Question 15:

Number of kg of direct material required for the production of 20,000 units of Z85 product is 800,000 kg (20,000units*40kgs)

Number of kg going to purchase = Required for production + Closing Inventory – Opening Inventory

So , Number of kg going to purchase                       = 800,000 kg + 50,000 kg - 0kgs

       = 850,000 kg

Duvall Spend on purchase of direct material is $1,700,000.00 (850,000kgs*$2.00 per kg)

So, Option C is the correct answer that is $1,700,000.00