Exam: 061683RR - PLANNING, PERFORMANCE Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer. Use the following information to answer this question. The Adams Company, a merchandising firm, has budgeted its activity for November according to the following information: · Sales were at $450,000, all for cash. · Merchandise inventory on October 31 was $200,000. · The cash balance on November 1 was $18,000. · Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash. · Budgeted depreciation for November is $25,000. · The planned merchandise inventory on November 30 is $230,000. · The cost of goods sold is 70% of the selling price. · All purchases are paid for in cash. 1. The budgeted cash disbursements for November are A. $530,000. B. $345,000. C. $405,000. D. $375,000. Use the following information to answer this question. Werber Clinic uses client visits as its measure of activity. During January, the clinic budgeted for 2,700 client visits, but its actual level of activity was 2,730 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for January: Data used in budgeting: Fixed element Variable element per month per client-visit Revenue ___-___ $33.60 Personnel expenses $22,100 $8.70 Medical supplies 1,100 6.60 Occupancy expenses 5,600 1.60 Administrative expenses 3,700 0.40 Total expenses $32,500 $17.30 Actual results for January: Revenue $93,408 Personnel expenses $46,251 Medical supplies $19,348 Occupancy expenses $9,508 Administrative expenses $4,772 2. The activity variance for personnel expenses in January would be closest to A. $261 F. B. $661 F. C. $261 U. D. $661 U. Use the following information to answer this question. Moorhouse Clinic uses client visits as its measure of activity. During December, the clinic budgeted for 3,700 client visits, but its actual level of activity was 3,690 client visits. The clinic has provided the following data concerning the formulas used in its budgeting and its actual results for December: Data used in budgeting: ...

1. Exam: 061683RR - PLANNING, PERFORMANCE
Questions 1 to 20: Select the best answer to each question. Note
that a question and its answers may be split across a page break,
so be sure that you have seen the entire question and all the
answers before choosing an answer.
Use the following information to answer this question.
The Adams Company, a merchandising firm, has budgeted its
activity for November according to the following information:
· Sales were at $450,000, all for cash.
· Merchandise inventory on October 31 was $200,000.
· The cash balance on November 1 was $18,000.
· Selling and administrative expenses are budgeted at $60,000
for November and are paid for in cash.
· Budgeted depreciation for November is $25,000.
· The planned merchandise inventory on November 30 is
$230,000.
· The cost of goods sold is 70% of the selling price.
· All purchases are paid for in cash.
1. The budgeted cash disbursements for November are
A. $530,000.
B. $345,000.
C. $405,000.
D. $375,000.
Use the following information to answer this question.

2. Werber Clinic uses client visits as its measure of activity.
During January, the clinic budgeted for 2,700 client visits, but
its actual level of activity was 2,730 client visits. The clinic has
provided the following data concerning the formulas used in its
budgeting and its actual results for January:
Data used in budgeting:
Fixed element
Variable element per month
per client-visit
Revenue ___-___
$33.60
Personnel expenses $22,100
$8.70
Medical supplies 1,100
6.60
Occupancy expenses 5,600
1.60
Administrative expenses 3,700
0.40
Total expenses $32,500
$17.30
Actual results for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
2. The activity variance for personnel expenses in January
would be closest to
A. $261 F.
B. $661 F.
C. $261 U.

3. D. $661 U.
Use the following information to answer this question.
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits,
but its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in
its budgeting and its actual results for December:
Data used in budgeting:
Fixed element
Variable element per month
per client-visit
Revenue ____-____
$25.10
Personnel expenses $27,100
$7.10
Medical supplies 1,500
4.50
Occupancy expenses 6,000
1.00
Administrative expenses 3,000
0.10
Total expenses $37,600
$12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
3. The spending variance for medical supplies in December

4. would be closest to
A. $725 U.
B. $725 F.
C. $680 U.
D. $680 F.
4. Vandall Corporation manufactures and sells a single product.
The company uses units as the measure of activity in its budgets
and performance reports. During April, the company budgeted
for 7,300 units, but its actual level of activity was 7,340 units.
The company has provided the following data concerning the
formulas used in its budgeting and its actual results for April:
Data used in budgeting:
Fixed element
Variable element per
month per unit
Revenue ___-___
$35.40
Direct labor 0
$3.30
Direct materials 0
15.90 Manufacturing overhead 49,200
1.20 Selling and
administrative expenses 26,600
0.10 Total expenses $75,800
$20.50
Actual results for April:
Revenue $254,146
Direct labor $24,722
Direct materials $116,496
Manufacturing overhead $59,608 Selling and
administrative expenses $26,494
The overall revenue and spending variance (i.e., the variance

5. for net operating income in the revenue and spending variance
column on the flexible budget performance report) for April
would be closest to
A. $6,144 U.
B. $6,740 F.
C. $6,144 F.
D. $6,740 U.
5. The company plans to sell 22,000 units of Product WZ in
June. The finished-goods inventories on June 1 and June 30 are
budgeted to be 100 and 400 units, respectively. The direct labor
hours are 11,000 andthe direct labor rate is $10.50. Budgeted
direct-labor costs for June would be
A. $455,700.
B. $234,150.
C. $462,000.
D. $117,075.
6. Division X of Charter Corporation makes and sells a single
product which is used by manufacturers of fork lift trucks.
Presently it sells 12,000 units per year to outside customers at
$24 per unit. The annual capacity is 20,000 units and the
variable cost to make each unit is $16. Division Y of Charter
Corporation would like to buy 10,000 units a year from Division
X to use in its products. There would be no cost savings from
transferring the units within the company rather than selling
them on the outside market. What should be the lowest
acceptable transfer price from the perspective of Division X?
A. $24.00
B. $17.60
C. $21.40
D. $16.00
Use the following information to answer this question.

6. Werber Clinic uses client visits as its measure of activity.
During January, the clinic budgeted for 2,700 client visits, but
its actual level of activity was 2,730 client visits. The clinic has
provided the following data concerning the formulas used in its
budgeting and its actual results for January:
Data used in budgeting:
Fixed element
Variable element per month
per client-visit
Revenue ___-___
$33.60
Personnel expenses $22,100
$8.70
Medical supplies 1,100
6.60
Occupancy expenses 5,600
1.60
Administrative expenses 3,700
0.40
Total expenses $32,500
$17.30
Actual results for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
7. The activity variance for administrative expenses in January
would be closest to
A. $8 U.
B. $12 U.
C. $8 F.

7. D. $12 F.
Use the following information to answer this question.
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits,
but its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in
its budgeting and its actual results for December:
Data used in budgeting:
Fixed element
Variable element per month
per client-visit
Revenue ____-____
$25.10
Personnel expenses $27,100
$7.10
Medical supplies 1,500
4.50
Occupancy expenses 6,000
1.00
Administrative expenses 3,000
0.10
Total expenses $37,600
$12.70
Actual results
for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239

8. 8. The activity variance for personnel expenses in December
would be closest to
A. $2,361 U.
B. $2,361 F.
C. $71 U.
D. $71 F.
Use the following information to answer this question.
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag
of Fastgro as follows:
Standard
Standard Cost
Quantity
per bag
Direct material 20 pounds
$8.00
Direct labor 0.1 hours
$1.10 Variable overhead 0.1 hours
$0.40
The company had no beginning inventories of any kind on
January 1. Variable overhead is applied to production on the
basis of standard direct-labor hours. During January, the
company recorded the following activity:
· Production of Fastgro: 4,000 bags
· Direct materials purchased: 85,000 pounds at a cost of
$32,300
· Direct-labor worked: 390 hours at a cost of $4,875
· Variable overhead incurred: $1,475
· Inventory of direct materials on January 31: 3,000 pounds
9. The labor efficiency variance for January is

9. A. $475 F.
B. $110 F.
C. $350 U.
D. $130 U.
Use the following information to answer this question.
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag
of Fastgro as follows:
Standard
Standard Cost
Quantity
per bag
Direct material 20 pounds
$8.00
Direct labor 0.1 hours
$1.10
Variable overhead 0.1 hours
$0.40
The company had no beginning inventories of any kind on
January 1. Variable overhead is applied to production on the
basis of standard direct-labor hours. During January, the
company recorded the following activity:
· Production of Fastgro: 4,000 bags
· Direct materials purchased: 85,000 pounds at a cost of
$32,300
· Direct-labor worked: 390 hours at a cost of $4,875
· Variable overhead incurred: $1,475
· Inventory of direct materials on January 31: 3,000 pounds
10. The materials price variance for January is
A. $1,640 U.

10. B. $1,300 U.
C. $1,640 F.
D. $1,700 F.
11. The LFM Company makes and sells a single product,
Product T. Each unit of Product T requires 1.3 hours of direct
labor at a rate of $9.10 per direct-labor hour. LFM Company
needs to prepare a direct-labor budget for the second quarter of
next year. The budgeted direct-labor cost per unit of Product T
would be
A. $11.83.
B. $7.00.
C. $10.40.
D. $9.10.
12. The Charade Company is preparing its Manufacturing
Overhead budget for the fourth quarter of the year. The
budgeted variable factory overhead is $5.00 per direct-labor
hour; the budgeted fixed factory overhead is $75,000 per month,
of which $15,000 is factory depreciation. If the budgeted direct-
labor time for December is 8,000 hours, then total budgeted
factory overhead per direct-labor hour (rounded) is
A. $9.38.
B. $14.38.
C. $16.25.
D. $12.50.
Use the following information to answer this question.
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits,
but its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in
its budgeting and its actual results for December:
Data used in budgeting:

11. Fixed element
Variable element per month
per client-visit
Revenue ____-____
$25.10
Personnel expenses $27,100
$7.10
Medical supplies 1,500
4.50
Occupancy expenses 6,000
1.00
Administrative expenses 3,000
0.10
Total expenses $37,600
$12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
13. The medical supplies in the flexible budget for December
would be closest to
A. $17,472.
B. $18,105.
C. $17,378.
D. $18,150.
14. The budget or schedule that provides necessary input data
for the direct-labor budget is the
A. schedule of cash collections.
B. cash budget.
C. raw materials purchases budget.

12. D. production budget.
15. Super Drive is a computer hard-drive manufacturer. The
company's balance sheet for the fiscal year ended on November
30 appears below:
Super Drive, Inc.
Statement of Financial
Position For the year ended
November 30 Assets:
Cash $52,000
Accounts receivable 150,000
Inventory 315,000
Property, plant, and equipment 1,000,000
Total Assets $1,517,000
Liabilities and stockholders' equity:
Accounts payable $175,000
Common stock 900,000
Retained earnings 442,000
Total liabilities and
stockholders' equity $1,517,000
Additional information regarding Super Drive's operations
appears below:
· Sales are budgeted at $520,000 for December and $500,000 for
January.
· Collections are expected to be 60% in the month of sale and
40% in the month following sale. There are no bad debts.
· 80% of the disk-drive components are purchased in the month
prior to the month of the sale, and 20% are purchased in the
month of the sale. Purchased components comprise 40% of the
cost of goods sold.
· Payment for components purchased is made in the month
following the purchase.
· Assume that the cost of goods sold is 80% of sales.

13. The budgeted cash collections for the upcoming December
should be
A. $402,000.
B. $462,000.
C. $520,000.
D. $208,000.
Use the following information to answer this question.
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag
of Fastgro as follows:
Standard
Standard Cost
Quantity
per bag
Direct material 20 pounds
$8.00
Direct labor 0.1 hours
$1.10 Variable overhead 0.1 hours
$0.40
The company had no beginning inventories of any kind on
January 1. Variable overhead is applied to production on the
basis of standard direct-labor hours. During January, the
company recorded the following activity:
· Production of Fastgro: 4,000 bags
· Direct materials purchased: 85,000 pounds at a cost of
$32,300
· Direct-labor worked: 390 hours at a cost of $4,875
· Variable overhead incurred: $1,475
· Inventory of direct materials on January 31: 3,000 pounds

14. 16. The labor rate variance for January is
A. $585 U.
B. $585 F.
C. $475 U.
D. $475 F.
17. A company's average operating assets are $220,000, and its
net operating income is $44,000. The company invested in a
new project, increasing average assets to $250,000 and
increasing its net operating income to $49,550. What is the
project's residual income if the required rate of return is 20%?
A. ($600)
B. $600
C. ($450)
D. $450
Use the following information to answer this question.
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits,
but its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in
its budgeting and its actual results for December:
Data used in budgeting:
Fixed element
Variable element per month
per client-visit
Revenue ____-____
$25.10
Personnel expenses $27,100
$7.10
Medical supplies 1,500
4.50
Occupancy expenses 6,000

15. 1.00
Administrative expenses 3,000
0.10
Total expenses $37,600
$12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
18. The personnel expenses in the planning budget for
December would be closest to
A. $51,009.
B. $53,299.
C. $51,147.
D. $53,370.
19. There are various budgets within the master budget. One of
these budgets is the production budget. Which of the following
best describes the production budget?
A. It summarizes the costs of producing units for the budget
period.
B. It details the required raw materials purchases.
C. It's calculated based on the sales budget and the desired
ending inventory.
D. It details the required direct-labor hours.
20. Which of the following will not result in an increase in
return on investment (ROI), assuming other factors remain the
same?
A. An increase in net operating income
B. A reduction in expenses
C. An increase in sales

16. D. An increase in operating assets
End of exam