10.Keppler corporation applies manufacturing overhead to products on the basis o
ID: 2435766 • Letter: 1
Question
10.Keppler corporation applies manufacturing overhead to products on the basis of standard machine hours. The company’s cost formula for variable overhead cost is $4.90 per machine hour. The actual variable overhead cost for the month was $25,160. The original budget for the month was based on, 5,000 machine hours. The company actually worked 5,320 machine hours during the month. The standard hours allowed for the actual output of the month totaled 5,220 machine hours. What was the variable overhead efficiency variance for the month?
A. $1,078 unfavorable
B. $490 unfavorable
C. $418 favorable
D. $908 favorable
12. The west division of fitzmaurice corporation had average operating assets of $450,000 and net operating income of $87,300 in november. The minimum required rate of return for performance evaluation purpose is 18%.
What was the west division’s minimum required return in november?
A. $87,300
B. $15,714
C. $96, 714
D. $81,000
13. Beak Industries is a division of a major corporation. Last year the division had total sales of $10,600,000, net operating income of $1,070,600, and average operating assets of $4,000,000.
The division turonver is closest to:
A.2.09
B.9.90
C.2.65
D.0.27
17. Isomer Industrial Training Corporation is considering the purchase of new presentation equipment at a cost of $150,000. The equipment has an estimated useful life of 10 years with an expected salvage value of zero. The equipment is expected to generate net cash inflows of $35,000 per year in each of the 10 years. Isomer's discount rate is 16%. Isomer uses the straight line of depreciation for its assets.
What is the payback period of the presentation equipment?
A.2.3 years
B.3.0 years
C.4.3 years
D.5.8 years
19. The management of Cerra Corporations is considering three investment project I, J, and K. Project I would require an ivestment of $18,000, Project J of $42,000, and Project K of $85,000. The present value of the cash inflows would be $19,260 for Project I, $45,780 for Project J, and $91,800 for Project K.
Rank the projects according to the profitability index, from most profitable to least profitable.
A. J,K,I
B. K,J,I
C. K,I,J
D. I,K,J
Explanation / Answer
Overhead efficiency variance =
(Actual machine hours - Standard machine hours for actual production) X Standard variable overhead rate
= (5,320 hours - 5,220 ) x $4.90
= 100 x $4.90 = $490 unfavorable
What was the west division’s minimum required return in november?
A. $87,300
B. $15,714
C. $96,714
D. $81,000 i.e. $450,000 x 18%
The division turonver is closest to:
A.2.09
B.9.90
C.2.65
D.0.27
Assets turnover ratio = Sales / Average Operating assets
= $10,600,000 / $4,000,000
= 2.65
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