Part A. Motorcycle Manufacturers, Inc. projected sales of 57,500 machines for th

Question

Part A. Motorcycle Manufacturers, Inc. projected sales of 57,500 machines for the year. The estimated January 1 inventory is 6,950 units, and the desired December 31 inventory is 7,350 units. What is the budgeted production (in units) for the year?

a.57,500 b.57,900 c.57,100 d.43,200

PART B. Motorcycle Manufacturers, Inc.  has the following data related to direct materials costs for November: actual costs for 4,600 pounds of material, $5.20; and standard costs for 4,450 pounds of material at $6.20 per pound.

What is the direct materials price variance?

a.$4,600 unfavorable b.$930 unfavorable c.$930 favorable d.$4,600 favorable

PART C .Motorcycle Manufacturers, Inc. sells a single product. Budgeted sales for the year are anticipated to be 647,000 units, estimated beginning inventory is 108,000 units, and desired ending inventory is 82,000 units. The quantities of direct materials expected to be used for each unit of finished product are given below.

Material A 0.50 lb. per unit @ $0.64 per pound
Material B 1.00 lb. per unit @ $2.31 per pound
Material C 1.20 lb. per unit @ $1.16 per pound

The dollar amount of material A used in production during the year is

a.$207,040 b.$198,720 c.$1,434,510 d.$864,432

PART D. Motorcycle Manufacturers, Inc. uses the total cost concept of product pricing. Below is the cost information for the production and sale of 55,800 units of its sole product. Magpie desires a profit equal to a 23% rate of return on invested assets of $610,000.

The markup percentage on total cost for the company's product is

a.19.1% b.15.3% c.32.6% d.24.9%

Fixed factory overhead cost $39,500 Fixed selling and administrative costs 7,400 Variable direct materials cost per unit 4.78 Variable direct labor cost per unit 1.88 Variable factory overhead cost per unit 1.13 Variable selling and administrative cost per unit 4.50

Explanation / Answer

Part-A: Answer is b. 57900 units Explanation: Budgeted sales 57500 Add: Ddesired ending inventory 7350 Less: Desired beginning Inventory -6950 Budgeted production 57900 Part-B: Answer is d. $ 4600 favorable Explanation: Material price variance: Actiual qty (Std price-Actual price) 4600 (6.20-5.20) = $ 4600 Favorable Part C: Answer is b. $ 198,720 Explanation: Production units: Sales units 647000 Add: ending inventory 82000 Less: Beginning inventory 108000 Production units: 621000 Cost per unit of Material A (0.50 lb@0.64 per lbs) 0.32 Total material ccost of A in $ 198720 Part D: Answer is a. 19.10% Explanation: Total Cost: Maetrial (55800*4.78) 266724 labour (55800*1.88) 104904 Variable Mfg oh (55800*1.13) 63054 Variable Selling oh (55800*4.50) 251100 Fixed mfg oh 39500 Fixed Selling and admin OH 7400 Total Cost: 732682 Desired return (610,000*23%) 140300 Mark up on total cost 19.15%

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