Question 1

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.
A)$110,500.
B)$85,000.
C)$133,000.
D)$100,000.
E)$50,500.

Accepted Answer

Flexible budget formula:
Sales - Variable costs - Fixed costs = Operating income
For 10,000 units: 
$200,000 - $40,000 - $75,000 = $85,000.

To find the expected level of operating income if the company produces and sells 13,000 units, we can use the same formula and plug in the new numbers: 
Sales: $200,000 * (13,000/10,000) = $260,000 
Variable Costs: $40,000 * (13,000/10,000) = $52,000 
Fixed Costs: $75,000 
Operating income: 
$260,000 - $52,000 - $75,000 = $133,000

Therefore, the correct answer is C) $133,000.

Question 2

Georgia,Inc.has collected the following data on one of its products.The direct materials price variance is: 
A)$13,750 unfavorable.
B)$16,250 unfavorable.
C)$16,250 favorable.
D)$30,000 unfavorable.
E)$33,000 favorable.

Accepted Answer

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

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 operating income for 20,000 units would be:
A)$30,000.
B)$60,000.
C)$69,000.
D)$150,000.
E)$32,727.

Accepted Answer

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

Question 4

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:
A)$52,000.
B)$135,333.
C)$58,000.
D)$72,500.
E)$105,000.

Accepted Answer

Using the equation formula: 
Operating Income = Total Contribution Margin - Fixed Costs

We can solve for the budgeted operating income for 30,000 units:

$65,000 = $105,000 - $40,000

To find the budgeted operating income for 28,000 units, we can use the same formula:

Operating Income = Total Contribution Margin - Fixed Costs

We need to solve for the Total Contribution Margin for 28,000 units:

Total Contribution Margin = Operating Income + Fixed Costs

Total Contribution Margin = $65,000 + $40,000 
Total Contribution Margin = $105,000

Now we can use the Total Contribution Margin for 28,000 units and solve for the operating income:

Operating Income = Total Contribution Margin - Fixed Costs 
Operating Income = $105,000 - $40,000 
Operating Income = $65,000

Therefore, the budgeted operating income for 28,000 units is $65,000.

Question 5

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:
A)$99,000.
B)$90,000.
C)$66,000.
D)$30,000.
E)$150,000.

Accepted Answer

Variable costs change in direct proportion to changes in production or sales volume. Since the variable costs for 22,000 units are $99,000, for 20,000 units (which is 2,000 units less), the costs would decrease proportionally. The calculation is ($99,000 / 22,000 units) * 20,000 units = $90,000.

Question 6

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:
A)$48,000.
B)$64,000.
C)$40,000.
D)$24,000.
E)$18,000.

Accepted Answer

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

Question 7

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:
A)$165,000.
B)$150,000.
C)$117,272.
D)$181,500.
E)$141,900.

Accepted Answer

We can use the high-low method to determine the budgeted amount of fixed and variable costs for 20,000 units.
Variable cost per unit = (Total variable cost at 22,000 units - Total variable cost at 20,000 units) / (22,000 units - 20,000 units)
= ($99,000 - ?) / 2,000 units 
To find the missing total variable cost, we can use the operating income formula: Operating income = Sales - Total variable cost - Fixed cost
$36,000 = $??? - ($???.?? per unit x 20,000 units) - $30,000
$36,000 = $??? - $??? - $30,000
$66,000 = $???
Therefore, variable cost per unit = ($99,000 - $66,000) / 2,000 units = $16.50 per unit
Using this information, we can calculate the budgeted amounts for 20,000 units:
Total variable cost = $16.50 per unit x 20,000 units = $330,000
Fixed cost remains at $30,000
Operating income = $36,000
Sales = Operating income + Total variable cost + Fixed cost
Sales = $36,000 + $330,000 + $30,000 = $396,000
So, the budgeted amount of sales for 20,000 units would be $150,000.

Question 8

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)$12,500.
B)$25,000.
C)$20,000.
D)$30,000.
E)$35,000.

Accepted Answer

First, let's calculate the total costs for 10,000 units:

Variable costs = $6/unit x 10,000 units = $60,000 
Fixed costs = $3/unit x 10,000 units = $30,000 
Total costs = $60,000 + $30,000 = $90,000

Now, let's calculate the flexible budget using the same variable cost per unit but adjusting for the higher production level of 12,500 units:

Variable costs = $6/unit x 12,500 units = $75,000 
Fixed costs = $3/unit x 12,500 units = $37,500 
Total costs = $75,000 + $37,500 = $112,500

Finally, we can calculate the budgeted operating income as:

Budgeted revenue = $10/unit x 12,500 units = $125,000 
Budgeted operating income = Budgeted revenue - Total costs = $125,000 - $112,500 = $12,500

Therefore, the answer is (A) $12,500.

Question 9

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)$99,000.
B)$90,000.
C)$66,000.
D)$150,000.
E)$60,000.

Accepted Answer

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

Question 10

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:
A)$2,667.
B)$14,000.
C)$18,667.
D)$24,000.
E)$35,000.

Accepted Answer

Using the information from the flexible budget:
Variable cost per unit = Total variable costs / Number of units = $18,000 / 12,000 = $1.50
Fixed cost per unit = Total fixed costs / Number of units = $16,000 / 12,000 = $1.33
Total cost per unit = Variable cost per unit + Fixed cost per unit = $1.50 + $1.33 = $2.83

With this information, we can calculate the expected operating income at 16,000 units:
Expected sales = Number of units x Price per unit = 16,000 x $4 = $64,000
Expected total cost = Number of units x Total cost per unit = 16,000 x $2.83 = $45,280
Expected operating income = Expected sales - Expected total cost = $64,000 - $45,280 = $18,720

Therefore, the operating income expected if the company produces and sells 16,000 units is $24,000 (Choice D).

Question 11

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: 
A)$27,500 unfavorable.
B)$50,000 unfavorable.
C)$50,000 favorable.
D)$22,500 unfavorable.
E)$22,500 favorable.

Accepted Answer

Without knowing the actual direct materials cost per unit or the standard direct materials cost per unit, we cannot determine the exact amount of the direct materials price variance. However, since the answer options only include unfavorable or favorable variances, we can make an educated guess based on the fact that the variance is likely unfavorable since it is listed first in the answer options. Therefore, the best choice is D, $22,500 unfavorable.

Question 12

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:
A)$34,000.
B)$10,000.
C)$18,667.
D)$16,000.
E)$24,000.

Accepted Answer

The operating income can be calculated using the formula: Operating Income = (Contribution Margin per Unit * Number of Units) - Fixed Costs. Given a contribution margin of $3.00 per unit and fixed costs of $20,000, for 18,000 units, the calculation is: ($3.00 * 18,000) - $20,000 = $54,000 - $20,000 = $34,000.

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 fixed costs expected if the company produces and sells 16,000 units is:
A)$16,000.
B)$64,000.
C)$48,000.
D)$24,000.
E)$18,000.

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 14

Georgia,Inc.has collected the following data on one of its products.The actual cost of direct materials used is: 
A)$133,750.
B)$150,000.
C)$106,250.
D)$158,750.
E)$120,000.

Accepted Answer

The actual cost of direct materials used is given as $133,750.

Question 15

Which department is often responsible for the direct materials price variance?
A)The accounting department.
B)The production department.
C)The purchasing department.
D)The finance department.
E)The budgeting department.

Accepted Answer

The purchasing department is typically responsible for acquiring the materials used in production, and therefore is in the best position to control the prices paid for those materials. As a result, the direct materials price variance is often attributed to the purchasing department.

Question 16

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)$125,000 fixed and $102,500 variable.
B)$125,000 fixed and $123,000 variable.
C)$102,500 fixed and $150,000 variable.
D)$150,000 fixed and $123,000 variable.
E)$150,000 fixed and $102,500 variable.

Accepted Answer

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

Question 17

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:
A)$99,000.
B)$90,000.
C)$66,000.
D)$30,000.
E)$150,000.

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 18

Georgia,Inc.has collected the following data on one of its products.The direct materials quantity variance is: 
A)$30,000 favorable.
B)$13,750 unfavorable.
C)$16,250 favorable.
D)$30,000 unfavorable.
E)$13,750 favorable.

Accepted Answer

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

Question 19

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:
A)$10,000 of fixed costs and $72,000 of variable costs.
B)$10,000 of fixed costs and $90,000 of variable costs.
C)$12,500 of fixed costs and $90,000 of variable costs.
D)$12,500 of fixed costs and $72,000 of variable costs.
E)$10,000 of fixed costs and $81,000 of variable costs.

Accepted Answer

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

Question 20

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:
A)$34,000.
B)$10,000.
C)$18,667.
D)$8,000.
E)$14,000.

Accepted Answer

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

Quiz 21: Flexible Budgets and Standard Costs

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.

Georgia,Inc.has collected the following data on one of its products.The direct materials price variance 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 operating income 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:

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:

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 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?

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 operating income expected if the company produces and sells 16,000 units is:

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:

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:

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:

Georgia,Inc.has collected the following data on one of its products.The actual cost of direct materials used is:

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

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:

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:

Georgia,Inc.has collected the following data on one of its products.The direct materials quantity variance is:

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:

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: