1. The West Division of Shekarchi Corporation had average operating assets of $6
ID: 2472399 • Letter: 1
Question
1. The West Division of Shekarchi Corporation had average operating assets of $640,000 and net operating income of $110,000 in March. The minimum required rate of return for performance evaluation purposes is 19%.
$110,000
$121,600
$20,900
$142,500
2. Landram Corporation makes a product with the following standard costs:
In March the company produced 4,700 units using 10,230 kilos of the direct material and 2,210 direct labor-hours. During the month, the company purchased 10,800 kilos of the direct material at a cost of $76,680. The actual direct labor cost was $38,233 and the actual variable overhead cost was $11,934.
The materials price variance for March is:
$940 U
$1,080 F
$1,080 U
$940 F
What was the West Division's minimum required return in March?Explanation / Answer
Assume minimum required return in March is "x"
then x/640,000 = 19%
= 640,000*0.19 = x
x = $121,600
Material Price variance = Actual Quantity * (Actual Price - Standard Price)
= 10,800 * ((76,680/10,800) - 7) = 1,080 U
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