Q1: Jordan Auto has developed the following production plan:

Month January February March April

Units 10,000 8,000 9,000 12,000

Each unit contains 3 pounds of direct materials. The desired direct materials ending inventory each month
is 20% of the next month’s production. (The beginning inventory meets this requirement.) Jordan has
developed the following direct labor standards for production of these units

Department 1 Department2
Hours per unit 2 0.5
Hourly rate 6.75 12
Required:

A)- How much direct material should Jordan Auto purchase in March?
B)- How much is the total budgeted direct labor dollars for February usage?

Q2: The following information pertains to Amigo Corporation:

Month Sales Purchases

July $30,000 $10,000

August 34,000 12,000
September 38,000 14,000
October 42,000 16,000
November 48,000 18,000
December 60,000 20,000
Cash is collected from customers in the following manner:

Month of sale 30%

Month following sale 50%
Two months following sale 15%
Amount uncollectible 5%
40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following
month.
Required:

a. Prepare a summary of cash collections for the 4th quarter.

b. Prepare a summary of cash disbursements for the 4th quarter.
Q: Madzinga’s Draperies manufactures curtains. A certain window requires the following:

Direct materials standard 10 square yards at $5 per yard

Direct manufacturing labor standard 5 hours at $10

During the second quarter, the company made 1,500 curtains and used 14,000 square yards of
fabric costing $68,600. Direct labor totaled 7,600 hours for $79,800.

Required:
a. Compute the direct materials price and quantity variances for the quarter.
b. Compute the direct manufacturing labor price and efficiency variances for the quarter.

Q:  During October, Keliihoomalu Clinic budgeted for 2,700 patient-visits, but its actual level of activity
was 2,200 patient-visits. Revenue should be $27.30 per patient-visit. Personnel expenses should be
$21,100 per month plus $6.80 per patient-visit. Medical supplies should be $500 per month plus $4.90 per
patient-visit. Occupancy expenses should be $5,700 per month plus $0.90 per patient-visit.
Administrative expenses should be $3,700 per month plus $0.40 per patient-visit.

Required

Prepare the clinic's flexible budget for October based on the actual level of activity for the month. 
 Q: Glunn Company makes three products in a single facility. These products have the following unit
product costs:

   

Additional data concerning these products are listed below.

   

The mixing machines are potentially the constraint in the production facility. A total of 24,200 minutes
are available per month on these machines.
Direct labor is a variable cost in this company.

Required:

a. How many minutes of mixing machine time would be required to satisfy demand for all three
products?
b. How much of each product should be produced to maximize net operating income? (Round off to the
nearest whole unit.)
c. Up to how much should the company be willing to pay for one additional hour of mixing machine time
if the company has made the best use of the existing mixing machine capacity? (Round off to the nearest
whole cent.) 
Q: The Cabinet Shoppe is considering the addition of a new line of kitchen cabinets to its current
product lines. Expected cost and revenue data for the new cabinets are as follows:

   

If the new cabinets are added, it is expected that the contribution margin of other product lines at
the cabinet shop will drop by $20,000 per year.

Required:

1)- If the new cabinet product line is added next year, the increase in net operating income
resulting from this decision would be: 

2)- What is the lowest selling price per unit that could be charged for the new cabinets and still
make it economically desirable to add the new product line? 

Q: Sohr Corporation processes sugar beets that it purchases from farmers. Sugar beets are
processed in batches. A batch of sugar beets costs $50 to buy from farmers and $15 to crush in
the company's plant. Two intermediate products, beet fiber and beet juice, emerge from the
crushing process. The beet fiber can be sold as is for $20 or processed further for $19 to make
the end product industrial fiber that is sold for $58. The beet juice can be sold as is for $41 or
processed further for $23 to make the end product refined sugar that is sold for $58.

 Required:

1)- How much profit (loss) does the company make by processing one batch of sugar beets into
the end products industrial fiber and refined sugar? 

2)- How much profit (loss) does the company make by processing the intermediate product beet
juice into refined sugar rather than selling it as is? 

3)-Which of the intermediate products should be processed further? 

Q: Thompson Company uses a standard cost system for its single product. The following data are
available:

Actual experience for the current year:

   

Standards per unit of product:

   

Required:

Compute the following variances for raw materials, direct labor, and variable overhead, assuming that the
price variance for materials is recognized at point of purchase:

a. Direct materials price variance.

b. Direct materials quantity variance.
c. Direct labor rate variance.
d. Direct labor efficiency variance.
Q: Foulds Company makes 10,000 units per year of a part it uses in the products it manufactures. The unit
product cost of this part is computed as follows:

  
An outside supplier has offered to sell the company all of these parts it needs for $42.30 a unit. If the
company accepts this offer, the facilities now being used to make the part could be used to make more
units of a product that is in high demand. The additional contribution margin on this other product would
be $39,000 per year.
If the part were purchased from the outside supplier, all of the direct labor cost of the part would be
avoided. However, $6.40 of the fixed manufacturing overhead cost being applied to the part would
continue even if the part were purchased from the outside supplier. This fixed manufacturing overhead
cost would be applied to the company's remaining products.

Required:
a. How much of the unit product cost of $47.90 is relevant in the decision of whether to make or buy the
part?
b. What is the net total dollar advantage (disadvantage) of purchasing the part rather than making it?
c. What is the maximum amount the company should be willing to pay an outside supplier per unit for the
part if the supplier commits to supplying all 10,000 units required each year?