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The following items are the same for the flexible budget and the master budget except: (a) Variable cost per unit. (b) Total fixed costs. (c) Units sold. (d) Sales price per unit. 1. 2. A favorable efficiency variance for direct labor indicates that (a) (b) A lower wage rate was paid for direct labor than was planned. Less direct labor hours were used during production for actual output than was planned. (c) More direct labor hours were used during production for the actual (d) A higher wage rate was paid for direct labor than was planned. Use the following information to answer Questions 3 through 6 output than was planned. The Kelowna Company lost the only copy of the master budget for 20x4. Management wants to evaluate this period's performance but needs the master budget to do so. Actual results for the period were as follows. KELOWNA COMPANY ACTUAL RESULTS FOR YEAR 20x4 240,000 units Sales Volume 1,344,000 Sales Revenue Variable Costs: 294.400 122,800 417,200 926,800 Manufacturing Marketing and Administrative Total Variable Costs Contribution margin Fixed costs: Manufacturing Marketing and administrative 410,000 226,400 636,400 290.400 Total Fixed Costs Operating profit The company planned to produce and sell 216,000 units at a price of S5 each. At that volume, the contribution margin would have been $760,000. Variable marketing and administrative costs are budgeted at 10% of sales revenue. Manufacturing fixed costs are estimated at $2 per unit at 216,000 units. unit. Management notes: "We originally budgeted an operating profit of $1 per 3. What is the flexible budget contribution margin? (a) $216,000. (b) $300,444 (c) $760,000. (d) $844,444. 4. What is the sales activity variance, using contribution margin to measure the variance? (a) 120,000 F. (b) 84,444 F (c) $120,000 U. (d) 84,444 U 5. What is the sales price variance? (a) $144,000 U. (b) $264,000 F. (c) $144,000 F (d) $264,000 U What are the total fixed costs for the master (static) budget? (a) $544,000 (b) $480,000 (c) $600,000. (d) $432,000. 6

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