MAS - MIDTERM

1. A Company is selling products A and B for the current month. The profits per product is affected by the
weather, as follows:
Products sold Profit
Sunny weather Rainy weather
A P21,000 P12,000
B 8,000 24,000

If the probability of sunny weather on a given day at this time is 30%, which product(s) should the
company sell?
a. 50% Product A; 50% Product B.
b. Product B, because it has a higher expected payoff.
c. Product A, because it has a higher profit in sunny weather than Product B
d. 70% to Product A; 30% to Product B

2. Jillian Inc. produces leather handbags. The production budget for the next four months is: July 5,000
units, August 7,000, September 7,500, October 8,000. Each handbag requires 1.3 hours of unskilled
labor (paid $8 per hour) and 2.2 hours of skilled labor (paid $15 per hour). How much will be paid to
skilled labor during the three months July through September?
a. $643,500 b. $292,500 c. $742,500 d. $4,387,500

3. Selena Company has received a special order for 10,000 units of its product. The product normally
sells for $32 and has the following manufacturing costs per unit:

Direct materials $10.00

Direct labor 4.50
Variable manufacturing overhead 3.50
Fixed manufacturing overhead 8.00

Selena is currently operating at 95% capacity (142,500 out of 150,000 capacity) and exceeding the
capacity will harm the company’s regular sales and production by sacrificing the sales to regular
channels just by accepting the order. What special price must Selena offer to be indifferent in both
alternatives?
a. None of the choices b. $32 c. $28.50
d. $21.50 e. $18

4. When developing a budget, an external factor to consider in the planning process is

a. New product development.
b. A change to a decentralized management system.
c. The implementation of a new bonus program.
d. The merger of two competitors.

5. When compared with ideal standards, practical standards

a. Serve as a better motivating target for manufacturing personnel.
b. Produce lower per-unit product costs.
c. Incorporate very generous allowance for spoilage and worker inefficiencies.
d. Result in a less desirable basis for the development of budgets.
6. Listed below is selected financial information for the Western Division of the Hansel Company for last
year. Amount Account (thousands)

Average working capital $ 625

General and administrative expenses 75
Net sales 4,000
Average plant and equipment 1,775
Cost of goods sold 3,525

If Hansel treats the Western Division as an investment center for performance measurement purposes,
what is the before-tax return on investment (ROI) for last year?
a. 22.54% b. 16.67% c. 19.79% d. 34.78%

7. The Accessories Department shows sales of $35,000. Variable costs are $30,000 and allocated
unavoidable fixed costs are $9,000, leaving a $4,000 loss. Based on this information and all other
things equal,
a. the department should be closed.
b. dropping the department will reduce total company profits by $5,000.
c. the department contributes $35,000 to total profits.
d. the department should be kept only if unit volume can be increased enough to increase sales by
$4,000.

8. Wilson Company uses a comprehensive planning and budgeting system. The proper order for Wilson
to prepare certain budget schedules would be
a. Cost of goods sold, balance sheet, income statement, and statement of cash flows.
b. Statement of cash flows, cost of goods sold, income statement, and balance sheet.
c. Income statement, balance sheet, statement of cash flows, and cost of goods sold.
d. Cost of goods sold, income statement, balance sheet, and statement of cash flows.

9. Benson Company has 200 units of an obsolete part. The variable cost to produce them was $4 per
unit. They could now be sold for $3 each and it would cost $6 to make them now. The parts could be
reworked for $8 each and sold for $17. What is the monetary advantage of reworking the parts over the
next-best action?
a. $1,000. b. $2,000. c. $ 600. d. $1,200.

10. REB Service Co. is a computer service center. For the month, REB had the following operating
statistics:

Sales $450,000
Operating income 25,000
Net profit after taxes 8,000
Total assets 500,000
Shareholders' equity 200,000
Cost of capital 6%

Based on the above information, which one of the following statements is true? REB has a
a. Return on investment of 1.6%. b. Residual income of $(22,000).
c. Return on investment of 4%. d. Residual income of $(5,000).

11. Harris Co.’s income statement for profit center #12 for August includes the following: Contribution
margin $84,000; Manager's salary, $24,000; Depreciation on accommodations, $9,600; Allocated
 corporate expenses, $6,000. The profit center's manager is most likely able to control which of the
following?
a. $60,000 b. $44,400 c. $84,000 d. $68,400

12. In a make-or-buy decision, which of the following is true?

a. Variable costs are the only relevant costs.
b. Alternative uses of space and machinery are relevant.
c. Allocated fixed costs are relevant.
d. Making is the correct decision when there is idle capacity.

13. Edith Carolina, president of the Deed Corporation, requires a minimum return on investment of 8% for
any project to be undertaken by her company. The company is decentralized, and leaves investment
decisions up to the discretion of the division managers as long as the 8% return is expected to be realized.
Michael Sanders, manager of the Cosmetics Division, has had a return on investment of 14% for his
division for the past 3 years and expects the division to have the same return in the coming year. Sanders
has the opportunity to invest in a new line of cosmetics that is expected to have a return on investment
of 12%.

If the Deed Corporation evaluates managerial performance using return on investment, what will be the
preference for taking on the proposed cosmetics line by Edith Carolina and Michael Sanders?
a. Accept for Sanders only b. Accept for Carolina only
c. Accept for both d. Reject for both

14. Which of the following factors should not be considered when deciding whether to investigate a variance?
a. likelihood that an investigation will reduce or eliminate future occurrences of the variance
b. trend of the variances over time
c. whether the variance is favorable or unfavorable
d. magnitude of the variance

15. Condensed monthly operating income data for Korbin Inc. for May follows:
Urban Store Suburban Store Total
Sales $80,000 $120,000 $200,000
Variable costs 32,000 84,000 116,000
Contribution margin $48,000 $36,000 $84,000
Direct fixed costs 20,000 40,000 60,000
Store segment margin $28,000 $(4,000) $24,000
Common fixed cost 4,000 6,000 10,000
Operating income $24.000 $(10,000) $14,000

Additional information regarding Korbin’s operations follows:

• One-fourth of each store’s direct fixed costs would continue if either store is closed.
• Korbin allocates common fixed costs to each store based on sales dollars.
• Management estimates that closing the Suburban Store would result to 10% decrease in Urban Store’s
sales.
• The operating results for May are representative of all months.

Assume Korbin is considering a promotional campaign at the Suburban Store that would not affect the
Urban Store. Increasing the annual promotional expense at the Suburban Store by $60,000 in order to
increase this store’s sales by10% would result in a monthly increase (decrease) in Korbin’s operating
income during the year (rounded) of
 a. $487 b. $7,000 c. $(5,000) d. $(1,400)

16. GMH Company manufactures 100,000 units of Part X annually for use in one of its main products. The
total manufacturing cost for 100,000 units of Part X is as follows:

Direct materials $120,000

Direct labor 80,000
Variable overhead 40,000
Fixed overhead 160,000
Total cost $400,000

Selin Company has offered to sell GMH 100,000 units of Part X per year. If GMH accepts this offer, the
facilities used to produce Part X can be used in the production of other components. This change would
save GMH $10,000 in rent for the leased production facility used at present to support the production of
other components. What is the amount of relevant costs for this make-or-buy decision?
a. $240,000 b. $400,000 c. $200,000 d. $250,000

17. A Company is selling products A and B for the current month. The profits per product is affected by the
weather, as follows:
Products sold Profit
Sunny weather Rainy weather
A P21,000 P12,000
B 8,000 24,000

Assuming that the probability of sunny weather would be 30%. If an experienced weather forecaster
offers to give the management an accurate weather forecast for a fee of P4,000, which of the following
is correct?
a. The management would not accept the offer because nobody can forecast weather accurately.
b. The management would not accept the offer because the cost of the information is higher than
the expected value of perfect information.
c. The management would accept the offer for better and accurate weather forecast.
d. The management would accept the offer because the management can maximize its profits if
they know the accurate weather forecast.

18. Venus Company applies overhead based on direct labor hours. The variable overhead standard is 10
hours at $3.50 per hour. During October, Venus Company spent $157,600 for variable overhead.
47,440 labor hours were used to produce 4,800 units. What is the over- or underapplied variable
overhead?
a. $10,400 overapplied b. $8,440 underapplied
c. $1,960 overapplied d. $8,440 overapplied

19. When actual performance varies from the budgeted performance, managers will be more likely to
revise future budgets if the variances were
a. favorable rather than unfavorable. b. uncontrollable rather than controllable.
c. controllable rather than uncontrollable. d. small.

20. Assume the following selected costs incurred by a mining company (in pesos) are shown blow:
Cleaning rivers due to contamination 50,000
Restoring land 20,000
Training employees 30,000
Operating and maintaining pollution equipment 80,000
Developing safety measures 40,000
 Inspecting process 60,000
Selecting equipment 10,000
Designing products 70,000

Refer to the above information. How much is the total cost of noncompliance (failure costs)?
a. P210,000 b. None of the choices
c. P360,000 d. P150,000

21. The imputed interest rate used in the residual income approach to performance evaluation can best be
described as the
a. Target return on investment set by the company's management.
b. Average lending rate for the year being evaluated.
c. Average return on investments for the company over the last several years.
d. Historical weighted-average cost of capital for the company.

22. Whitehall Corp. produces chemicals used in the cleaning industry. During the previous month, Whitehall
incurred $300,000 of joint costs in producing 60,000 units of AM-12 and 40,000 units of BM-36. Whitehall
uses the units-of-production method to allocate joint costs. Currently, AM-12 is sold at split-off for $3.50
per unit. Flank Corporation has approached Whitehall to purchase all of the production of AM-12 after
further processing. The further processing will cost Whitehall $90,000. Assume that Whitehall Corp.
agreed to sell AM-12 to Flank Corp. for $5.50 per unit after further processing. During the first month of
production, Whitehall sold 50,000 units with 10,000 units remaining in inventory at the end of the month.
With respect to AM-12, which on of the following statements is true?
a. The operating profit last month was $50,000 and the inventory value is $45,000.
b. The operating profit last month was $50,000 and the inventory value is $15,000.
c. The operating profit last month was $120,000 and the inventory value is $30,000.
d. The operating profit last month was $200,000 and the inventory value is $30,000.

23. Bailey Corporation. incurred 2,300 direct labor hours to produce 600 units of product. Each unit should
take 4 direct labor hours. Bailey Corporation applies variable overhead to production on a direct labor
hour basis. The variable overhead efficiency variance
a. will depend upon the capacity measure selected to assign overhead to production.
b. will be favorable.
c. is impossible to determine without additional information
d. will be unfavorable.

24. All of the following are advantages of the use of budgets in a management control system except that
budgets
a. Promote communication and coordination within the organization.
b. Provide performance criteria.
c. Limit unauthorized expenditures.
d. Force management planning.

25. In developing the budget for the next year, which one of the following approaches would produce the
greatest amount of positive motivation and goal congruence?
a. Have the divisional and senior management jointly develop goals and objectives while
constructing the corporation's overall plan of operation.
 b. Have the divisional and senior management jointly develop goals and the divisional manager
develop the implementation plan.
c. Permit the divisional manager to develop the goal for the division that in the manager's view will
generate the greatest amount of profits.
d. Have senior management develop the overall goals and permit the divisional manager to
determine how these goals will be met.

26. Buchanan Company currently sells 4,000 units of product Q for $1 each. Capacity is 5,000 units. Variable
costs are $0.40 and avoidable fixed costs are $400. A chain store has offered $0.80 per unit for 400 units
of Q. If Buchanan accepts the order, the change in income will be a
a. $80 decrease. b. $60 decrease.
c. $160 increase. d. $480 increase.

27. Whitehall Corp. produces chemicals used in the cleaning industry. During the previous month, Whitehall
incurred $300,000 of joint costs in producing 60,000 units of AM-12 and 40,000 units of BM-36. Whitehall
uses the units-of-production method to allocate joint costs. Currently, AM-12 is sold at split-off for $3.50
per unit. Flank Corporation has approached Whitehall to purchase all of the production of AM-12 after
further processing. The further processing will cost Whitehall $90,000. Concerning AM-12, which one of
the following alternatives is most advantageous?
a. Whitehall should process further and sell to Flank f the total selling price per unit after further
processing is greater than $5.00.
b. Whitehall should continue to sell at split-off unless Flank offers at least $4.50 per unit after
further processing, which covers Whitehall’s total costs.
c. Whitehall should process further and sell to Flank if the total selling price per unit after further
processing is greater than $5.25, which maintains the same gross profit percentage.
d. Whitehall should process further and sell to Flank if the total selling price per unit after further
processing costs is greater than $3.00, which covers the joint costs.

28. Swan Company has a direct labor standard of 15 hours per unit of output. Each employee has a
standard wage rate of $14 per hour. During March, employees worked 13,100 hours. The direct labor
rate variance was $9,170 favorable, the direct labor efficiency variance was $15,400 unfavorable. What
was the actual payroll?
a. $192,570 b. $174,230 c. $183,400 d. $168,000

29. Boxwood Inc. has forecast purchases on account to be $620,000 in March, $740,000 in April, $840,000
in May, and $980,000 in June. Seventy percent of purchases are paid for in the month of purchase, the
remaining 30% are paid in the following month. What is the budgeted Accounts Payable balance for June
30?
a. $588,000 b. $686,000 c. $252,000 d. $294,000

30. Pueblo Company sells a product for $60. Variable cost is $32. Pueblo could accept a special order for
1,000 units at $46. If Pueblo accepted the order, how many units could it lose at the regular price before
the decision became unwise?
a. 0. b. 500. c. 1,000. d. 200.

31. To foster continuous improvement, standards should ________________ in difficulty over time.
Select one:
a. remain stable b. increase c. decrease d. idealize

32. Edith Carolina, president of the Deed Corporation, requires a minimum return on investment of 8% for
any project to be undertaken by her company. The company is decentralized, and leaves investment
 decisions up to the discretion of the division managers as long as the 8% return is expected to be realized.
Michael Sanders, manager of the Cosmetics Division, has had a return on investment of 14% for his
division for the past 3 years and expects the division to have the same return in the coming year. Sanders
has the opportunity to invest in a new line of cosmetics that is expected to have a return on investment
of 12%.

If the Deed Corporation evaluates managerial performance using residual income based on the corporate
minimum required rate of return, what will be the preference for taking on the proposed cosmetics line
by Edith Carolina and Michael Sanders?
a. Accept for both b. Accept for Sanders only
c. Reject for both d. Accept for Carolina only

33. An appropriate transfer price between two divisions of The Stark Company can be determined from the
following data:

Fabricating Division: Assembling Division:

Market price of subassembly $50 Number of units needed 900
Variable cost of subassembly $20
Excess capacity (in units) 1,000

What is the natural bargaining range for the two divisions?

a. $50 is the only acceptable price. b. Any amount less than $50.
c. Between $50 and $70. d. Between $20 and $50.

34. Audrey has forecast sales to be $205,000 in February, $270,000 in March, $290,000 in April, and
$310,000 in May. The average cost of goods sold is 60% of sales. All sales are made on credit and
sales are collected 50% in the month of sale, 30% the month following and the remainder two months
after the sale. What is the budgeted Accounts Receivable balance on May 31?
a. $127,800 b. $213,000 c. $186,000 d. $155,000

35. Which of the following is a true statement?

a. Internal constraints are physical while external constraints are imaginary.
b. Constraints may be either internal or external.
c. Theory of Constraints is useful in analyzing internal constraints but cannot identify external
constraints.
d. Theory of Constraints is useful for identifying physical constraints but cannot incorporate
nonphysical constraints.

36. Condensed monthly operating income data for Korbin Inc. for May follows:
Urban Store Suburban Store Total
Sales $80,000 $120,000 $200,000
Variable costs 32,000 84,000 116,000
Contribution margin $48,000 $36,000 $84,000
Direct fixed costs 20,000 40,000 60,000
Store segment margin $28,000 $(4,000) $24,000
Common fixed cost 4,000 6,000 10,000
Operating income $24.000 $(10,000) $14,000

Additional information regarding Korbin’s operations follows:

• One-fourth of each store’s direct fixed costs would continue if either store is closed.
• Korbin allocates common fixed costs to each store based on sales dollars.
• Management estimates that closing the Suburban Store would result to 10% decrease in Urban
 Store’s sales.
• The operating results for May are representative of all months.

A decision by Korbin to close the Suburban Store would result in a monthly increase (decrease) in
Korbin’s operating income of
a. $(6,000) b. $(10,800) c. $4,000 d. $(1,200)

37. Simson Company's master budget shows straight-line depreciation on factory equipment of $258,000.
The master budget was prepared at an annual production volume of 103,200 units of product. This
production volume is expected to occur uniformly throughout the year. During September, Simson
produced 8,170 units of product, and the accounts reflected actual depreciation on factory machinery of
$20,500. Simson controls manufacturing costs with a flexible budget. The flexible budget amount for
depreciation on factory machinery for September would be
a. $20,500 b. $21,500 c. $20,425 d. $19,475

38. Jura Corporation is developing standards for the next year. Currently XZ-26, one of the material
components, is being purchased for $36.45 per unit. It is expected that the component's cost will
increase by approximately 10% next year and the price could range from $38.75 to $44.18 per unit,
depending on the quantity purchased. The appropriate standard for XZ26 for next year should be set at
the
a. Current actual cost plus the forecasted 10% price increase.
b. Price agreed upon by the purchasing manager and the appropriate level of company
management.
c. Highest price in the anticipated range to ensure that there are only favorable purchase price
variances.
d. Lowest purchase price in the anticipated range to keep pressure on purchasing to always buy in
the lowest price range.

39. A limitation of transfer prices based on actual cost is that they

a. Must be adjusted by some markup.
b. Lack clarity and administrative convenience.
c. Can lead to suboptimal decisions for the company as a whole.
d. Charge inefficiencies to the department that is transferring the goods.

40. A total variance is best defined as the difference between total

a. actual cost and total cost applied for the actual output of the period.
b. actual cost and total cost applied for the standard output of the period.
c. actual cost and total standard cost of the actual input of the period.
d. standard cost and total cost applied to production.

41. In analyzing company operations, the controller of the Jason Corporation found a $250,000 favorable
flexible-budget revenue variance. The variance was calculated by comparing the actual results with the
flexible budget. This variance can be wholly explained by
a. The total static budget variance. b. The total flexible budget variance.
c. The total sales volume variance. d. Changes in unit selling prices.
42. Assume the following selected costs incurred by a mining company (in pesos) are shown blow:

Cleaning rivers due to contamination 50,000

Restoring land 20,000
Training employees 30,000
Operating and maintaining pollution equipment 80,000
Developing safety measures 40,000
Inspecting process 60,000
Selecting equipment 10,000
Designing products 70,000

Refer to the above information. How much is the total compliance cost?
a. P150,000 b. P210,000
c. P360,000 d. None of the choices

43. Two companies share customers in the same market.

• Company X conducted a study of the customers’ buying habits and obtained the following results:
Company X: 80% of its customers were repeat customers each month, 20% went to Company Y
• Company Y: 60% of its customers were repeat customers each month, 40% went to Company X

If the customers’ buying habits continue for a long period of time, the percentage of customers each
company will have is
a. 66.6% for Company X; 33.4% for Company Y
b. 120% for Company X; 80% for Company Y
c. 33.4% for Company X; 66.6% for Company Y
d. 80% for Company X; 20% for Company Y

44. Which of the following is not a trend promoting the increased use of business process reengineering
(BPR)?
a. price competition caused by globalization
b. business expansion
c. pursuit of increased quality
d. advancement of technology

45. Oxford Co. has a material standard of 2.1 pounds per unit of output. Each pound has a standard price of
$10 per pound. During February, Oxford Co. paid $57,220 for 4,840 pounds, which were used to produce
2,400 units. What is the direct materials price variance?
a. $6,820 unfavorable b. $8,820 favorable
c. $6,820 favorable d. $8,820 unfavorable

46. In managing environmental costs, which of the following strategy deals with intensive on-site
remediation costs, in which a company produces wastes and cleans it up before discharging to the
environment?
a. None of the choices b. End-of-pipe strategy
c. Process improvement strategy d. Prevention strategy

47. A planning calendar in budgeting is the

a. Calendar period covered by the annual budget and the long-range plan.
 b. Sales forecast by months in the annual budget period.
c. Calendar period covered by the budget.
d. Schedule of activities for the development and adoption of the budget.

48. Whitman has a direct labor standard of 2 hours per unit of output. Each employee has a standard wage
rate of $22.50 per hour. During July, Whitman paid $94,750 to employees for 4,445 hours worked. 2,350
units were produced during July. What is the direct labor efficiency variance?
a. $5,262.50 unfavorable b. $5,737.50 favorable
c. $5,262.50 favorable d. $11,000.00 favorable

49. A Company is selling products A and B for the current month. The profits per product is affected by the
weather, as follows:
Products sold Profit
Sunny weather Rainy weather
A P21,000 P12,000
B 8,000 24,000

If the management could have perfect information, assuming that the probability of sunny weather
would be 30%, what is the expected value of perfect information?
a. None of the choices b. P3,900 c. P4,500 d. P8,400

50. Which one of the following statements concerning approaches for the budget development is correct?
a. With the information technology available, the role of budgets as an organizational
communication device has declined.
b. To prevent ambiguity, once departmental budgeted goals have been developed, they should
remain fixed even if the sales forecast upon which they are based proves to be wrong in the middle
of the fiscal year.
c. Since department managers have the most detailed knowledge about organizational operations,
they should use this information as the building blocks of the operating budget.
d. The top-down approach to budgeting will not ensure adherence to strategic organizational
goals.

51. Meadow Company produces hand tools. A sales budget for the next four months is as follows: March
10,000 units, April 13,000, May 16,000 and June 21,000. Meadow Company's ending finished goods
inventory policy is 10% of the following month's sales. What is budgeted ending finished goods inventory
for May?
a. 2,100 b. 1,600 c. 1,000 d. 1,300

52. Jackson Inc. produces leather handbags. The production budget for the next four months is: July 5,000
units, August 7,000, September 7,500, October 8,000. Each handbag requires 0.5 square meters of
leather. Jackson Inc.'s leather inventory policy is 30% of next month's production needs. On July 1 leather
inventory was expected to be 1,000 square meters. Leather is expected to cost $5.00 per square meter
in June, but go up to $6.00 per square meter in July. What is the expected cost of leather purchases in
July?
a. $16,300 b. $15,300 c. $16,200 d. $13,800

53. The budget that describes the long-term position, goals, and objectives of an entity within its
environment is the
a. Cash management budget. b. Strategic budget.
c. Capital budget. d. Operating budget.
54. The basic purpose of a responsibility accounting system is
a. Motivation. b. Budgeting. c. Authority. d. Variance analysis.

55. Marlow Company produces hand tools. A production budget for the next four months is as follows: March
10,300 units, April 13,300, May 16,500, and June 21,800. Marlow Company's ending finished goods
inventory policy is 10% of the following month's sales. Meadow plans to sell 16,000 units in May. How
many units will be sold in April?
a. 13,570 b. 12,380 c. 13,620 d. 13,000

56. Condensed monthly operating income data for Korbin Inc. for May follows:
Urban Store Suburban Store Total
Sales $80,000 $120,000 $200,000
Variable costs 32,000 84,000 116,000
Contribution margin $48,000 $36,000 $84,000
Direct fixed costs 20,000 40,000 60,000
Store segment margin $28,000 $(4,000) $24,000
Common fixed cost 4,000 6,000 10,000
Operating income $24.000 $(10,000) $14,000

Additional information regarding Korbin’s operations follows:

• One-fourth of each store’s direct fixed costs would continue if either store is closed.
• Korbin allocates common fixed costs to each store based on sales dollars.
• Management estimates that closing the Suburban Store would result to 10% decrease in Urban
Store’s sales.
• The operating results for May are representative of all months.

Assume one-half of the Suburban Store’s dollar sales are from items sold at variable cost to attract
customers to the store. Korbin is considering the deletion of these items, a move that would reduce the
Suburban Store’s direct fixed expenses by 15% and result in 20% loss of Suburban Store’s remaining
sales volume. This change would not affect the Urban Store. A decision by Korbin to eliminate the
items sold at cost would result in a monthly increase (decrease) in Korbin’s operating income of
a. $(5,200) b. $(7,200) c. $(1,200) d. $2,000

57. Actual fixed overhead is $33,300 (12,000 machine hours) and fixed overhead was estimated at
$34,000 when the predetermined rate of $3.00 per machine hour was set. If 11,500 standard hours
were allowed for actual production, applied fixed overhead is
a. $34,000.
b. $34,500.
c. $33,300.
d. not determinable without knowing the actual number of units produced.

58. The first unit of a manufacturing job required 100 labor hours to complete. When the production doubled,
the cumulative average time per unit to complete the two units was 90 labor hours. Assume that the
learning curve continues based on the given information, the cumulative time required to produce 4 units
is:
a. 400 labor hours b. 324 labor hours
c. 300 labor hours d. 360 labor hours

59. Scarlett Company has a direct material standard of 3 gallons of input at a cost of $5 per gallon. During
July, Scarlett Company purchased and used 7,500 gallons. The direct materials quantity variance was
 $750 unfavorable and the direct materials price variance was $3,000 favorable. How many units were
produced?
a. 2,500 units b. 2,450 units
c. 7,350 units d. 7,500 units

60. Which of the following costs is relevant in deciding whether to sell joint products at split-off or process
them further?
a. The unavoidable costs of further processing.
b. The avoidable costs of further processing.
c. The cost of materials used to make the joint products.
d. The variable cost of operating the joint process.