Chapter 6
Maga Company, which has only one product, has provided the following data concerning its most recent
month of operations:
Required:
a. What is the unit product cost for the month under variable costing?
b. What is the unit product cost for the month under absorption costing?
c. Prepare a contribution format income statement for the month using variable costing.
d. Prepare an income statement for the month using absorption costing.
e. Reconcile the variable costing and absorption costing net operating incomes for the month.
Chapter 7
The Spurling Cleaning Brigade Company provides housecleaning services to its clients. The company uses
an activity-based costing system for its overhead costs. The company has provided the following data
from its activity-based costing system.
The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs.
One particular client, the Vandal family, requested 32 jobs during the year that required a total of 192
hours of housecleaning. For this service, the client was charged $2,200.
Required:
Using the activity-based costing system, compute the customer margin for the Vandal family. Round off
all calculations to the nearest whole cent.
Chapter 8
Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations
follow:
 Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January.
 Collections are expected to be 70% in the month of sale, 27% in the month following the sale, and 3%
uncollectible.
 The cost of goods sold is 65% of sales.
 The company desires to have an ending merchandise inventory at the end of each month equal to 50%
of the next month's cost of goods sold. Payment for merchandise is made in the month following the
purchase.
 Other monthly expenses to be paid in cash are $22,500.
 Monthly depreciation is $19,000.
 Ignore taxes.
1. Expected cash collections in December are:
A. $59,400
B. $140,000
C. $199,400
D. $200,000
2. The cost of December merchandise purchases would be:
A. $133,250
B. $68,250
C. $130,000
D. $143,000
3. December cash disbursements for merchandise purchases would be:
A. $136,500
B. $68,250
C. $133,250
D. $130,000
4. The difference between cash receipts and cash disbursements for December would be:
A. $17,900
B. $22,500
C. $40,400
D. $62,900
5. The net income for December would be:
A. $40,400
B. $22,500
C. $47,500
D. $28,500
6. The accounts receivable balance, net of uncollectible accounts, at the end of December would be:
A. $82,000
B. $113,400
C. $60,000
D. $54,000
7. Accounts payable at the end of December would be:
A. $65,000
B. $68,250
C. $130,000
D. $133,250
Chapter 9
Bamba Corporation's cost formula for its selling and administrative expense is $47,900 per
month plus $52 per unit. For the month of April, the company planned for activity of 6,000 units,
but the actual level of activity was 5,960 units. The actual selling and administrative expense for
the month was $364,490.
1. The selling and administrative expense in the planning budget for April would be closest to:
A. $357,820
B. $359,900
C. $364,490
D. $366,936
2. The selling and administrative expense in the flexible budget for April would be closest to:
A. $357,501
B. $359,900
C. $357,820
D. $364,490
3. The activity variance for selling and administrative expense in April would be closest to:
A. $4,590 F
B. $2,080 F
C. $2,080 U
D. $4,590 U
4. The spending variance for selling and administrative expense in April would be closest to:
A. $4,590 F
B. $6,670 F
C. $6,670 U
D. $4,590 U
Chapter 10
Silmon Corporation makes a product with the following standard costs:
In June the company produced 4,200 units using 21,830 grams of the direct material and 2,580
direct labor-hours. During the month the company purchased 24,100 grams of the direct material
at a price of $6.80 per gram. The actual direct labor rate was $14.60 per hour and the actual
variable overhead rate was $3.90 per hour. The materials price variance is computed when
materials are purchased. Variable overhead is applied on the basis of direct labor-hours.
Required:
a. Compute the materials quantity variance.
b. Compute the materials price variance.
c. Compute the labor efficiency variance.
d. Compute the direct labor rate variance.