The Budget and Actual Cost Statements for the Production Department

question 3

Multiple Choice

The budget and actual cost statements for the production department for the latest period were as follows. 11ec37eb_8baf_8298_97b9_bbe728f13da1__00 Notes. The 10% increase in production was required to meet unexpected additional sales demand. The production manager is responsible for negotiating the price of materials with suppliers. The normal working time is 900 hours per period. Any overtime worked above these 900 hours is paid at a premium of 50%. In preparing the flexible budget for the latest period, which TWO of the following statements are correct? (Choose two.)

• A) The fixed costs should be flexed to $40,000 + 10% = $44,000.
• B) The material quantity should be flexed to 60,000 + 10% = 66,000 kg.
• C) The basic pay hours should not be flexed; they should remain at 1,000 hours.
• D) The overtime hours should be flexed to (1,000 + 10%) - 900 = 200 hours.
• E) The material price should be flexed to the actual figure of $3.10 per kg.

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Definitions:

Chi-square Statistic

The Chi-square statistic is a measure used in statistics to compare observed data with data expected under a specific hypothesis, often used in tests of independence.

Expected Frequencies

Predicted counts of occurrences across different categories based on a statistical model.

Chi-square Statistic

A measure used in statistics to analyze the independence of two categorical variables and assess how likely it is that any observed difference between sets occurred by chance.