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Exhibit 18-4

Playtime Toys began operations on January 1, 2011. During January it produced 2,000 toys and sold 1,850 toys. The following are needed to make 1 toy:

Wood	2 board feet at $3 per foot
Paint	1.5 quarts at $2 per quart
Direct labor	3 hours at $6 per hour

Manufacturing overhead is applied at a rate of $4 per direct labor hour.

Refer to Exhibit 18-4. Given the information above, the cost of direct materials used in January would be:

$18,000 $11,100 $16,600 $12,000

Cachet Inc. had a $93,000 balance in Accounts Receivable on July 1. In July, it expects to collect 55% of these receivables and 30% of the July credit sales, which are budgeted at $138,000. What is the budgeted accounts receivable at the end of July?

$41,400 $92,550 $138,450 $51,150

The following resources are required to make 1 batch of ice cream:

Milk	5 gallons at $2.50 per gallon
Sugar	5 pounds at $0.30 per pound
Direct labor	45 minutes at $12.00 per hour
Manufacturing overhead	30 minutes at $6.00 per hour

Given this information, what is the cost of making 1 batch of ice cream?

$14.00 $23.00 $26.00 $21.50

Theodore's Musical Toys makes xylophones. Each xylophone takes 3 labor hours to make at a rate of $10.00 per hour. What is the budgeted production of xylophones if the budgeted direct labor cost for July is $16,200?

5,400 1,620 540 1,200

A department has a budgeted monthly manufacturing overhead cost of $160,000 plus $16 per direct labor hour. If a flexible budget reflects $388,000 for total manufacturing overhead cost for the month, the actual direct labor hours would be:

13,000 12,250 24,250 14,250

Exhibit 18-6

The July manufacturing overhead budget of Kyoto Corporation, shown below, was constructed assuming an activity level of 48,000 direct labor hours:

Variable costs:
	Indirect labor	$48,000
	Indirect materials	24,000
	Factory supplies	19,200	$ 91,200
Fixed costs:
	Depreciation	$38,400
	Supervision	69,600
	Property taxes	36,000	144,000
Total overhead costs			$235,200

Refer to Exhibit 18-6. If management prepared a flexible budget for July using 54,000 direct labor hours, what amount would this flexible budget show for indirect labor?

$27,000 $54,000 $48,000 $102,600

Refer to Exhibit 18-6. If management prepared a flexible budget for July using 40,000 direct labor hours, what amount would this flexible budget show for total variable costs?

$87,200 $91,200 $83,600 $76,000

Refer to Exhibit 18-6. If management prepared a flexible budget for July using 52,000 direct labor hours, what amount would this flexible budget show for total overhead costs?

$235,200 $254,800 $239,200 $242,800

Exhibit 18-7

Cedar Corporation uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows:

Indirect labor	$12.00
Indirect materials	6.00
Maintenance	2.00
Utilities	1.00

Fixed overhead costs per month are:

Supervision	$8,000
Insurance	1,600
Factory rent	1,300
Depreciation	1,900

Refer to Exhibit 18-7. If Cedar prepares a flexible budget for 4,000 direct labor hours, what amount will this budget show for variable manufacturing overhead costs?

$109,600 $84,000 $42,000 $8,400

Refer to Exhibit 18-7. If Cedar prepares a flexible budget for 6,000 direct labor hours, what amount will this budget show for total manufacturing overhead costs?

$12,800 $138,800 $126,000 $134,000

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