MULTIPLE CHOICE. Choose the one alternative that best completes the statement or

Question

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Ryder Inc. had the following results last year (in thousands). Management's target rate of return is 30% and the weighted average cost of capital is 5%. Its effective tax rate is 40%. Sales Total assets $20,000.000 income Current liabilities 5,100,000 What is the division's Return on Investment (ROD? A) 27.00% B) 10588% C)6000% D) 16667% 2) On the direct labor budget, the total quantity of direct labor hours neded is computed as A) quantity needed for production+ indirect labor hours-direct labor hours B) units to be produced x direct labor hour per unit. C) units to be produced - indirect labor hours cost per labor hour D) estimated direct labor hours needed cost per hour. 3) River Canoes Inc. sells its entry-level canoes for $650 each. Its variable cost is $300 per canoe. Fixed costs are $21,000 per month for volumes up to 1,700 canoes. Above 1,700 canoes, monthly fixed costs are $60,000. What is the budgeted operating income at a level of 400 canoes per month? A) $119,000 B) $239,000 C) $80,000 D) $140,000 4) Vases-R-Us Mfg. Co. manufactures quality vases. Budgeted sales and production data for the vases are as follov unit sales February March budgeted unit sales budgeted unit sales 4000 February budgeted unit March budgeted unit production Raw material required for each finished unit (in pounds) 4000 Each vase requires one pound of cay in its manufacture Cases-R-Us has a policy that the inventory of day at the end of each month needs to be equal to 10% of the production needs for the following month. At the beginning of January, 230 pounds of clay were in inventory. How many pounds of clay would Vases-R-Us need to purchase in February ? A) 2340 B) 2830 C) 4130 D) 2430 5) Purchases in May were $65,000, while expected purchases for June and July are $80,000 and $95,000, respectively. All purchases are paid 35% in the month of purchase and 65% in the following month. At what amount are June payments for purchases budgeted? A) $84,000 B) $74,750 )$70,250 D) $103,500 C-l

Explanation / Answer

1

Total Return on Asset =Operating Income/Total Asset =5400000/9000000 =60%

2

Option B

Units to be produced * Direct labor hr per unit

3

Contribution =Sales-Variable Cost =650-300 =$350 Per Unit

Operating Income =$350*400 Units-21000=119000

4

5

Answer is option C

=80000*0.35++65000*0.65

=$70250

Production Need 2,700.00 Add Desired Ending Inventory 400.00 Total Need 3,100.00 Less Beginning Inventory 230.00 Total Unit Purchased 2,870.00

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