Review Handout

1. The Bach Company provides the following standard cost data:

The direct labor price variance was

A) $2,400 favorable.
B) $2,400 unfavorable.
C) $2,375 favorable.
D) $2,375 unfavorable.

2. The Springer Company provides the following standard cost data:

Calculate the direct materials and direct labor variances. (3 for each.)

3. The Groovy Movie Chains has invested in a snack bar for its store, where
individual pizzas would be prepared and sold. The investment cost the company
$45,000. The company expects a sales volume for the new product to be 12,000
pizzas a year. Variable materials, preparation, and marketing costs are expected to
be $1.50 a unit and fixed costs are estimated at $15,000 a year. Based on a desired
12% ROI, what should Groovy Movies charge as the selling price per pizza?
A) $0.45
B) $2.75
C) $3.20
D) $5.20

4. Valentinaco has a yogurt division and a plastic container division. Usually the
container division sells 2,500 containers to outsiders each month. Its capacity is
3,200 containers per month. It has variable costs of $1.20, including shipping costs
of $0.10 per container. These shipping costs would be eliminated if the container
division sold directly to the yogurt division. Valentina’s yogurt division is
considering buying containers from the container division. The container division’s
market price (and the price the yogurt division pays to outside companies to obtain
containers) is $2.25. A. If the yogurt division wants 300 containers, what is the
appropriate transfer price? B. If the yogurt division wants 1000 containers, what is
the appropriate transfer price?