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Management by exception concentrates on investigating the most significant differences. |
If your company follows the principle of management by exception, which of the following departures from the budget would most likely be investigated?
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[removed] |
Rent |
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Labor ($800). |
| Water ( |
$50 |
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Depreciation |
Shula’s 347 Grill has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,700; depreciation, $800; and other fixed costs, $600. Each steak dinner sells for $14.00 each. How much would Shula’s profit increase if 10 more dinners were sold?
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$140.00 |
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$82.00 |
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$62.60 |
Paradise Pottery had the following costs in May when production is 800 ceramic pots: materials, $8,700; labor (variable), $2,900; depreciation, $1,100; rent, $900; and other fixed costs, $
1,500
. If production changes to 850 units, which will stay the same?
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fixed cost per unit |
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variable cost per unit |
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total variable cost |
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total cost per unit |
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Multiple Choice, Question 97 |
Raron’s Rockers is in the process of preparing a production cost budget for August. Actual costs in July for 120 rocking chairs were:
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Materials cost |
$4,800 |
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Labor cost |
3,000 |
|
2,500 |
|
|
Other fixed costs |
3,200 |
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Total |
$15,000 |
Materials and labor are the only variable costs. If production and sales are budgeted to increase to 150 chairs in August, how much is the expected total variable cost on the August budget?
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$9,750 |
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$16,950 |
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$17,325 |
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$18,750 |
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Multiple Choice, Question 109 |
ProGo plans to sell 1,200 carriers next year and has budgeted sales of $48,000 and profits of $20,000. Variable costs are projected to be $22 per unit. Nathan Co. offers to pay $21,000 to buy 600 units from ProGo. Total fixed costs are $5,000 per year. This offer does not affect ProGo’s other planned operations. The incremental revenues for this situation are
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$6,000. |
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$21,000. |
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$7,800. |
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$27,000. |
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Multiple Choice, Question 130 |
Breezes Curacao has 200 rooms. Each room rents at $130 per night and variable costs total $42 per room per night of occupancy. Fixed costs total $18,700 per month. If 70% of the rooms are occupied each of the 30 nights in June, how much will total variable costs be for June?
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$369,600 |
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$176,400 |
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$546,000 |
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$252,000 |
| Multiple Choice, Question 135
Rose Wilson is entering her senior year as an accounting major and has a number of options for her summer break. Her options for the 3 month break follow: (1) Work full time at a local accounting firm making $2,200 per month. (2) Take a summer class which will cost $800 and work half time making $1,100 per month. (3) Take a class at a cost of $800 and not work at all during the summer. Rose’s incremental revenue if she chooses option 1 over option 2 would be [removed]$3,300. [removed]$800. [removed]$6,600. [removed]$1,600. |
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Multiple Choice, Question 141 |
Serta Carpet, which manufactures carpet, incurred the following costs for March when 2,600 yards of carpet were produced and sold:
· $12,200 for nylon thread used on carpet
· $16,000 for scotch guard for carpet
· $4,000 for jute backing to reinforce the carpet
· $5,000 for glue to be used in the manufacturing process
· $21,000 for insurance (half for administrative activities, half for production activities)
· $7,000 for production employee’s wages
· $10,000 for rent (60% for the production facility, 40% for the administrative offices) How much are total variable costs if 2,200 yards of carpet are produced and sold in April?
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$44,200 |
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$55 |
,169
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$63,631 |
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$37,400 |
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Post-Lecture, Question 5 |
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A sunk cost is a cost already incurred. This would be $50, the cost of the ticket. |
Assume you purchase a ticket to a local football game for next week at a cost of $50. Before the day of the game, you are invited to a picnic by your best friend. You would have to bring $20 of hotdogs to the picnic. You could sell the ticket to the game for $55 to a scalping company. What is the sunk cost connected with deciding whether or not to attend the picnic?
[removed]$55
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$30 |
| Post-Lecture, Question 6 The incremental profit is the sum of the incremental revenue $3,000 ($4,800 – $1,800) between the two options and the cost savings $600 ($0 – $600).
Juanita is trying to decide whether or not to attend college during the next 12-week session. She has the following options: 1. Attend college full-time at a cost of $1,200. 2. Attend college part-time at a cost of $600 and work part-time earning $1,800. 3. Work full-time earning $4,800. What is Juanita’s incremental profit if she chooses option 3 over option 2? [removed]$3,600 [removed]$4,800 [removed]$3,000 [removed]$6,000 |
