# ACCOUNTING

Playtime Toys began operations on January 1, 2011. During January it produced 2,000 toys and sold 1,850 toys. The following are needed to make 1 toy:

Wood 2 board feet at \$3 per foot

Paint 1.5 quarts at \$2 per quart

Direct labor 3 hours at \$6 per hour

Manufacturing overhead is applied at a rate of \$4 per direct labor hour.

Refer to Exhibit 18-4. Given the information above, the cost of direct materials used in January would be:

a. \$11,100

b. \$12,000

c. \$16,600

d. \$18,000

Cachet Inc. had a \$93,000 balance in Accounts Receivable on July 1. In July, it expects to collect 55% of these receivables and 30% of the July credit sales, which are budgeted at \$138,000. What is the budgeted accounts receivable at the end of July?

a. \$138,450

b. \$92,550

c. \$41,400

d. \$51,150

The following resources are required to make 1 batch of ice cream:

Milk 5 gallons at \$2.50 per gallon

Sugar 5 pounds at \$0.30 per pound

Direct labor 45 minutes at \$12.00 per hour

Manufacturing overhead 30 minutes at \$6.00 per h

Given this information, what is the cost of making 1 batch of ice cream?

a. \$21.50

b. \$23.00

c. \$14.00

d. \$26.00

Theodore’s Musical Toys makes xylophones. Each xylophone takes 3 labor hours to make at a rate of \$10.00 per hour. What is the budgeted production of xylophones if the budgeted direct labor cost for July is \$16,200?

a. 540

b. 1,620

c. 5,400

d. 1,200

A department has a budgeted monthly manufacturing overhead cost of \$160,000 plus \$16 per direct labor hour. If a flexible budget reflects \$388,000 for total manufacturing overhead cost for the month, the actual direct labor hours would be:

a. 24,250

b. 13,000

c. 12,250

d. 14,250

Exhibit 18-6

The July manufacturing overhead budget of Kyoto Corporation, shown below, was constructed assuming an activity level of 48,000 direct labor hours:

Variable costs: \$48000

Indirect labor \$48,000

Indirect materials \$24,000

Factory supplies   19,200 \$ 91,200

Fixed costs:

Depreciation \$38,400

Supervision \$69,600

Property taxes   \$36,000   \$144,000

Refer to Exhibit 18-6. If management prepared a flexible budget for July using 54,000 direct labor hours, what amount would this flexible budget show for indirect labor?

a. \$27,000

b. \$48,000

c. \$54,000

d. \$102,600

Refer to Exhibit 18-6. If management prepared a flexible budget for July using 40,000 direct labor hours, what amount would this flexible budget show for total variable costs?

a. \$83,600

b. \$76,000

c. \$87,200

d. \$91200

Refer to Exhibit 18-6. If management prepared a flexible budget for July using 52,000 direct labor hours, what amount would this flexible budget show for total overhead costs?

a. \$239,200

b. \$254,800

c. \$235,200

d. \$242,800

Exhibit 18-7

Cedar Corporation uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows:

Indirect labor \$12.00

Indirect materials 6.00

Maintenance 2.00

Utilities 1.00

Fixed overhead costs per month are:

Supervision \$8,000

Insurance 1,600

Factory rent 1,300

Depreciation 1,900

Refer to Exhibit 18-7. If Cedar prepares a flexible budget for 4,000 direct labor hours, what amount will this budget show for variable manufacturing overhead costs?

a. \$109,600

b. \$42,000

c. \$8,400

d. \$84,000

Refer to Exhibit 18-7. If Cedar prepares a flexible budget for 6,000 direct labor hours, what amount will this budget show for total manufacturing overhead costs?

a. \$134,000

b. \$138,800

c. \$126,000

d. \$12,800

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