MajorNet Systems is a start up company that makes connectors for high speed Internet connections. The company has budgeted variable costs of $145 for each connector and fixed costs of $7,500 per month. MajorNet’s static budget predicted production and sales of 100 connectors in August, but the company actually produced and sold only 84 connectors at a total cost of $21,000.
1. MajorNet’s total flexible budget cost for 84 connectors per month is
a. $14,500.
b. $12,180.
c. $19,680.
d. $21,000.
2. MajorNet’s sales volume variance for total costs is
a. $1,320 U.
b. $1,320 F.
c. $2,320 U.
d. $2,320 F.
3. MajorNet’s flexible budget variance for total costs is
a. $1,320 U.
b. $1,320 F.
c. $2,320 U.
d. $2,320 F.
4. MajorNet Systems’ managers could set direct labor standards based on
a. time and motion studies.
b. continuous improvement.
c. benchmarking.
d. past actual performance.
e. Items a, b, c, and d are all correct.