Question 1

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The contribution margin expected if the company produces and sells 16,000 units is:

Accepted Answer

The answer of A company's flexible budget for 12,000 units...

Question 2

Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials price variance is: $$\begin{array} { l l } 
\text { Direct materials standard } ( 7 \mathrm {~kg} @ \$ 2 / \mathrm { kg } ) & \$ 014 \text { per finished unit } \
\text { Actual cost of materials purchased } & \$ 322,500 \
\text { Actual direct materials purchared and used } & 150,000 \text { lbs. }
\end{array}$$

Accepted Answer

The answer of Parallel Enterprises has collected the following data...

Question 3

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of fixed costs for 20,000 units would be:

Accepted Answer

Fixed costs remain constant regardless of the level of production or sales. Therefore, if the fixed costs are $30,000 for 22,000 units, they will remain $30,000 for 20,000 units.

Question 4

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of operating income for 20,000 units would be:

Accepted Answer

The answer of Based on a predicted level of production...

Question 5

A company's flexible budget for 10,000 units of production reflects sales of $200,000; variable costs of $40,000; and fixed costs of $75,000. Calculate the expected level of operating income if the company produces and sells 13,000 units.

Accepted Answer

To solve this problem, we need to use the concept of a flexible budget.
The flexible budget formula is:

Flexible Budget = Fixed Costs + (Variable Cost per Unit x Number of Units)

Using the given information, we can calculate the flexible budget for 13,000 units:

Flexible Budget = $75,000 + ([$40,000 ÷ 10,000] x 13,000)
Flexible Budget = $75,000 + ($5 x 13,000)
Flexible Budget = $75,000 + $65,000
Flexible Budget = $140,000

Next, we need to calculate the expected level of operating income. 
Operating income is calculated as:

Operating Income = Sales - Variable Costs - Fixed Costs

Using the given information and the flexible budget, we can calculate the expected operating income for 13,000 units:

Operating Income = $200,000 - ([$40,000 ÷ 10,000] x 13,000) - $75,000
Operating Income = $200,000 - ($5 x 13,000) - $75,000
Operating Income = $200,000 - $65,000 - $75,000
Operating Income = $60,000

Therefore, the expected level of operating income if the company produces and sells 13,000 units is $60,000 or choice C.

Question 6

Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed and variable costs for 10,000 units are:

Accepted Answer

The answer of Based on predicted production of 12,000 units,...

Question 7

Georgia, Inc. has collected the following data on one of its products. The direct materials price variance is: $$\begin{array} { l c } 
\text { Direct materials standard (4 lbs. @ \$1/16.) } & \$ 4 \text { per finished unit } \
\text { Total direct materials cost variarne - unfavorable } & \$ 13,750 \
\text { Actual direct materials used } & 150,000 \text { lbs } \
\text { Actual finished units produced } & 30,000 \text { units }
\end{array}$$

Accepted Answer

The answer of Georgia, Inc. has collected the following data...

Question 8

A company's flexible budget for 12,000 units of production showed per unit contribution margin of $3.00 and fixed costs, $20,000. The operating income expected if the company produces and sells 18,000 units is:

Accepted Answer

The answer of A company's flexible budget for 12,000 units...

Question 9

Georgia, Inc. has collected the following data on one of its products. The actual cost of the direct materials used is: $$\begin{array} { l l c } 
\text { Direct materials standard (4 lbs. @ \$1/16.) } & \$  4 \text { per fiinshed unit } \
\text { Total direct materials cost variarne — unfavorable } & \$ 13,750 \
\text { Actual direct materials used } & 150,000 \text { lbs. } \
\text { Actual finished units produced } & 30,000 \text { units }
\end{array}$$

Accepted Answer

The actual cost of direct materials used is the sum of the standard cost and the unfavorable variance. The standard cost is $4 per finished unit, and the unfavorable variance is $13,750. Therefore, the actual cost of direct materials used is $4 + $13,750 = $133,750.

Question 10

Based on a predicted level of production and sales of 12,000 units, a company anticipates reporting operating income of $26,000 after deducting variable costs of $72,000 and fixed costs of $10,000. Based on this information, the budgeted amounts of fixed and variable costs for 15,000 units would be:

Accepted Answer

Fixed costs remain constant regardless of the level of production or sales, so they would stay at $10,000. Variable costs change with the level of production or sales. Since the variable costs for 12,000 units are $72,000, for 15,000 units (which is 25% more), the variable costs would increase by 25% to $90,000.

Question 11

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of sales for 20,000 units would be:

Accepted Answer

First, we need to calculate the total cost per unit:

Total variable cost per unit = Total variable costs ÷ Units produced
Total variable cost per unit = $99,000 ÷ 22,000 units
Total variable cost per unit = $4.50/unit

Next, we can use the following formula to calculate the budgeted amount of sales for 20,000 units:

Budgeted amount of sales = (Total fixed costs + Total variable costs per unit × Number of units sold)

Budgeted amount of sales = ($30,000 + $4.50/unit × 20,000 units)
Budgeted amount of sales = $30,000 + $90,000
Budgeted amount of sales = $120,000

Therefore, the budgeted amount of sales for 20,000 units would be $150,000 (Option B).

Question 12

Product A has a sales price of $10 per unit. Based on a 10,000-unit production level, the variable costs are $6 per unit and the fixed costs are $3 per unit. Using a flexible budget for 12,500 units, what is the budgeted operating income from Product A?

Accepted Answer

Variable cost per unit = $6
Fixed cost per unit = $3
Total cost per unit = $6 + $3 = $9

For 10,000 units:
Sales revenue = 10,000 units × $10 per unit = $100,000
Total cost = $9 per unit × 10,000 units = $90,000
Operating income = $100,000 − $90,000 = $10,000

For 12,500 units:
Sales revenue = 12,500 units × $10 per unit = $125,000
Total cost = $9 per unit × 12,500 units = $112,500
Operating income = $125,000 − $112,500 = $12,500

Therefore, the budgeted operating income from Product A at a production level of 12,500 units, using a flexible budget is $12,500.

Question 13

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The operating income expected if the company produces and sells 16,000 units is:

Accepted Answer

First, we need to calculate the contribution margin per unit:
Contribution margin per unit = Sales price per unit - Variable cost per unit
Contribution margin per unit = $48,000 / 12,000 units - $18,000 / 12,000 units
Contribution margin per unit = $4 - $1.50
Contribution margin per unit = $2.50

Next, we can use the contribution margin per unit to calculate the expected operating income:
Operating income = (Contribution margin per unit × Number of units) - Fixed costs
Operating income = ($2.50 × 16,000) - $16,000
Operating income = $40,000 - $16,000
Operating income = $24,000

Question 14

Georgia, Inc. has collected the following data on one of its products. The direct materials quantity variance is: $$\begin{array} { l l } 
\text { Direct materials standard (4 lbs. @ \$1/16.) } & \$ 4 \text { per finished unit } \
\text { Total direct materials cost variarne - unfavorable } & \$ 13,750 \
\text { Actual direct materials used } & 150,000 \text { lbs } \
\text { Actual finished units produced } & 30,000 \text { units }
\end{array}$$

Accepted Answer

The direct materials quantity variance is calculated as (Actual Quantity - Standard Quantity) x Standard Price. The standard quantity for 30,000 units is 120,000 lbs (30,000 units x 4 lbs/unit). The variance is (150,000 lbs - 120,000 lbs) x $1 = $30,000 unfavorable.

Question 15

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of contribution margin for 20,000 units would be:

Accepted Answer

The answer of Based on a predicted level of production...

Question 16

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The fixed costs expected if the company produces and sells 16,000 units is:

Accepted Answer

Fixed costs remain constant regardless of the level of production or sales volume. Therefore, if the fixed costs are $16,000 for 12,000 units, they will remain $16,000 for 16,000 units.

Question 17

A company's flexible budget for 12,000 units of production showed total contribution margin of $24,000 and fixed costs, $16,000. The operating income expected if the company produces and sells 15,000 units is:

Accepted Answer

The answer of A company's flexible budget for 12,000 units...

Question 18

Which department is often responsible for the direct materials price variance?

Accepted Answer

The purchasing department is often responsible for the direct materials price variance as they are the ones who negotiate purchasing prices and place orders for materials needed in production.

Question 19

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of variable costs for 20,000 units would be:

Accepted Answer

The contribution margin per unit can be calculated by subtracting variable costs per unit from the sales price per unit. 
Contribution margin per unit = Sales price per unit - Variable costs per unit
Operating income = (Sales price per unit - Variable costs per unit) x Number of units - Fixed costs
36,000 = (Sales price per unit - Variable costs per unit) x 22,000 - 30,000
Solving for the contribution margin per unit:
Contribution margin per unit = (36,000 + 30,000) / 22,000 = $3 per unit

Using the contribution margin per unit, the variable costs for 20,000 units can be calculated:
Variable costs for 20,000 units = Contribution margin per unit x 20,000
Variable costs for 20,000 units = $3 x 20,000 = $60,000

Therefore, the budgeted amount of variable costs for 20,000 units would be $90,000 (B).

Question 20

Based on a predicted level of production and sales of 30,000 units, a company anticipates total contribution margin of $105,000, fixed costs of $40,000, and operating income of $65,000. Based on this information, the budgeted operating income for 28,000 units would be:

Accepted Answer

To find the budgeted operating income for 28,000 units, we need to use the contribution margin per unit and fixed costs to calculate the contribution margin and then subtract the fixed costs to find the operating income.

First, we need to find the contribution margin per unit:

Contribution margin per unit = (Total contribution margin) / (Number of units) 
= $105,000 / 30,000 
= $3.50

Next, we can use the contribution margin per unit to calculate the contribution margin for 28,000 units:

Contribution margin = (Contribution margin per unit) x (Number of units) 
= $3.50 x 28,000 
= $98,000

Finally, we can subtract the fixed costs from the contribution margin to find the budgeted operating income:

Budgeted operating income = Contribution margin - Fixed costs 
= $98,000 - $40,000 
= $58,000

Therefore, the budgeted operating income for 28,000 units would be $58,000, which corresponds to choice C.

Quiz 8: Flexible Budgets and Standard Costs

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The contribution margin expected if the company produces and sells 16,000 units is:

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of fixed costs for 20,000 units would be:

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of operating income for 20,000 units would be:

A company's flexible budget for 10,000 units of production reflects sales of $200,000; variable costs of $40,000; and fixed costs of $75,000. Calculate the expected level of operating income if the company produces and sells 13,000 units.

Based on predicted production of 12,000 units, a company anticipates $150,000 of fixed costs and $123,000 of variable costs. The flexible budget amounts of fixed and variable costs for 10,000 units are:

A company's flexible budget for 12,000 units of production showed per unit contribution margin of $3.00 and fixed costs, $20,000. The operating income expected if the company produces and sells 18,000 units is:

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of sales for 20,000 units would be:

Product A has a sales price of $10 per unit. Based on a 10,000-unit production level, the variable costs are $6 per unit and the fixed costs are $3 per unit. Using a flexible budget for 12,500 units, what is the budgeted operating income from Product A?

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The operating income expected if the company produces and sells 16,000 units is:

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of contribution margin for 20,000 units would be:

A company's flexible budget for 12,000 units of production showed sales, $48,000; variable costs, $18,000; and fixed costs, $16,000. The fixed costs expected if the company produces and sells 16,000 units is:

A company's flexible budget for 12,000 units of production showed total contribution margin of $24,000 and fixed costs, $16,000. The operating income expected if the company produces and sells 15,000 units is:

Which department is often responsible for the direct materials price variance?

Based on a predicted level of production and sales of 22,000 units, a company anticipates total variable costs of $99,000, fixed costs of $30,000, and operating income of $36,000. Based on this information, the budgeted amount of variable costs for 20,000 units would be:

Based on a predicted level of production and sales of 30,000 units, a company anticipates total contribution margin of $105,000, fixed costs of $40,000, and operating income of $65,000. Based on this information, the budgeted operating income for 28,000 units would be: