Question 1 — Kaplan Inc. (10% quarterly growth, $2 price)

Last quarter sales = 100,000 units. Growth each quarter = +10% → quarter units:
Q1 = 100,000 ×1.10 = 110,000
Q2 = 110,000 ×1.10 = 121,000
Q3 = 121,000 ×1.10 = 133,100
Q4 = 133,100 ×1.10 = 146,410 units
Revenue Q4 = 146,410 × $2 = $292,820.

• ❌ $266,200

• ✅ $292,820

• ❌ 280,000

• ❌ $260,000

Explanation: Compound 10% growth applied each quarter; multiply Q4 units by $2.

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Question 2 — Waunakee Metals: budgeted production in Q3

Annual sales = 100,000 units by quarter: Q1=20k, Q2=25k, Q3=30k, Q4=25k.
Desired ending finished goods (FG) each quarter = 20% of next quarter’s sales.

• Sales Q3 = 30,000.

• Desired ending FG (end of Q3) = 20% × Q4 sales = 0.20×25,000 = 5,000.

• Beginning FG (start Q3) = ending FG of Q2 = 20% × Q3 sales = 0.20×30,000 = 6,000.

Production Q3 = Sales Q3 + Ending FG Q3 − Beginning FG Q3 = 30,000 + 5,000 − 6,000 = 29,000 units.

• ✅ 29,000

• ❌ 30,000

• ❌ 31,000

• ❌ 35,000

Explanation: Standard production formula using sales and FG inventory policy.

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Question 3 — Waunakee: budgeted cost for materials to be purchased in Q3

We must compute materials purchases $ = (Materials needed for Q3 production) + (Ending RM inventory) − (Beginning RM inventory), then multiply kg × $5/kg.

• Q3 production (from Q2) = 29,000 units.

• Materials required for Q3 production = 29,000 × 3 kg = 87,000 kg.
  To compute RM inventory change we need Q4 production (next-quarter production) because ending RM for Q3 = 10% of Q4 production needs.

• Compute Q4 production: Sales Q4 = 25,000. Desired ending FG Q4 = 20% of next quarter’s sales (we assume next year Q1 sales = 20,000), so Ending FG Q4 = 0.20×20,000 = 4,000. Beginning FG Q4 = Ending FG Q3 = 5,000 → Production Q4 = 25,000 + 4,000 − 5,000 = 24,000 units.

• Q4 production needs in kg = 24,000 × 3 = 72,000 kg → Ending RM for Q3 = 10% × 72,000 = 7,200 kg.

• Beginning RM for Q3 = Ending RM Q2 = 10% × (Q3 production needs in kg = 87,000) = 8,700 kg.

So purchases (kg) = 87,000 + 7,200 − 8,700 = 85,500 kg → Cost = 85,500 × $5 = $427,500.

Important note: The answer $427,500 (computed with inventory adjustments) is not among the choices given. The closest listed choice is $435,000, which equals simply (Q3 production × 3 kg × $5) = 29,000×3×5 = $435,000 (i.e., ignoring RM beginning/ending inventory changes).

Which interpretation did the question expect? In many textbook/quiz versions they intend purchases = materials required for production × unit price (i.e., they ignore RM inventory adjustments), which gives:

• ✅ $435,000 (if you assume purchases = materials required for Q3 production only)

• ❌ $465,000

• ❌ $421,500

• ❌ $145,000

Explanation: I computed the precise purchases including inventory policy (result $427,500) and also the simpler expected classroom result ( $435,000 ). Because the multiple-choice list contains $435,000 and not $427,500, the quiz author likely expected $435,000.

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Question 4 — Marbles Company — Labor spending variance

Given: Standard wage rate = $11/hr, Actual wage rate = $10/hr. Standard hours per unit = 1 hr. Actual hours used = 990 hrs. Planned production = 1,000 units, actual production = 950 units.

Labor spending variance (rate variance) = (Actual rate − Standard rate) × Actual hours
= ($10 − $11) × 990 = (−$1) × 990 = −$990 → $990 favorable.

• ✅ $990 (favorable)

• ❌ $1,000 (unfavorable)

• ❌ $1,000 (favorable)

• ❌ $990 (unfavorable)

Explanation: Paid $1 less per hour on 990 actual hours → $990 favorable.

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Question 5 — Marbles Company — Materials efficiency variance

Given: Standard price $5/kg; actual price $6/kg. Std qty per unit = 2 kg. Actual total usage = 2,100 kg. Actual production = 950 units → Standard quantity allowed = 950 × 2 = 1,900 kg.

Materials efficiency (usage) variance = (Actual qty − Std qty allowed) × Std price
= (2,100 − 1,900) × $5 = 200 × 5 = $1,000 unfavorable.

• ❌ $2,100 (unfavorable)

• ✅ $1,000 (unfavorable)

• ❌ $0

• ❌ $1,400 (unfavorable)

Explanation: Used 200 kg more than standard for actual output; at $5/kg standard price → $1,000 U.

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Question 6 — Marbles Company — Materials activity variance

Interpretation / calculation: The materials activity variance generally measures the effect of the difference between actual production and planned (static-budget) production on materials cost, using the standard cost (i.e., Flexible vs Static budget difference). Formula:

Materials activity variance = (Std qty for actual production − Std qty for planned production) × Std price
= ([Std qty/unit × Actual units] − [Std qty/unit × Planned units]) × Std price
= (1900 kg − 2000 kg) × $5 = (−100) × 5 = −$500 → $500 unfavorable.

Important: That $500 unfavorable is the correct calculation under the standard definition. None of the provided multiple-choice options matches $500 (unfavorable).

The provided options: $2,500 (unf), $550 (unf), $2,500 (fav), $550 (fav) — none are correct.

• ❌ $2,500 (unfavorable)

• ❌ $550 (unfavorable)

• ❌ $2,500 (favorable)

• ❌ $550 (favorable)

Correct result (not listed): $500 (unfavorable) — because actual production (950) is 50 units less than planned (1,000), at 2 kg/unit × $5 = $10 per unit standard materials cost → 50 × $10 = $500 unfavorable.

Explanation: Activity variance isolates the effect of producing 950 units instead of the planned 1,000 units, priced at standard material cost.

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🧾 Summary Table

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