PART ONE:

Machine Builders Inc. adopted a standard cost system several years ago that it uses in conjunction with its process cost system. The per-unit standard costs for direct materials and direct labor for its single product are as follows:

Materials:	(4.0 kilograms $10.00 per kilogram)	$	40.00
Labor:	(4.0 hours $18.00 per hour)	$	72.00

All materials are issued at the beginning of processing. The operating data shown below were taken from the records for July:

In-process beginning inventory		none
In-process ending inventory90% complete as to labor		1,000	units
Units completed during the month		7,200	units
Budgeted output		8,000	units
Purchases of materials, in kilograms (AQ)		30,000
Total actual labor costs incurred	$	525,000
Direct labor hours worked (AQ)		28,000	hours
Materials purchase-price variance	$	3,000	unfavorable
Increase in materials inventory in July		1,500	kilograms
Beginning inventory of materials		0	kg.

The direct materials usage variance for July, to the nearest dollar, was:

Multiple Choice

• $12,000 unfavorable.

• $43,000 favorable.

• $15,000 unfavorable.

• $3,000 favorable.

PART TWO

Luanna Inc. manufactures game consoles. Some of the company's data was misplaced. Use the following information to replace the lost data.

	Actual Results				Flexible Budget Variance				Flexible Budget				Sales Volume Variance				Master Budget
Units		1,980																1,810
Revenues	$	138,600			$	1,980	U			A								B
Variable costs		C															$	70,590
Fixed costs	$	21,800
Operating income	$	46,350								D							$	36,000

The amount B (to the nearest dollar) is:

Multiple Choice

• $140,580.

• $116,640.

• $126,700.

• $128,510.