1.Sanchez Company\'s output for the current period was assigned a $416,000 stand

Question

1.Sanchez Company's output for the current period was assigned a $416,000 standard direct labor cost. The direct labor variances included a $10,400 unfavorable direct labor rate variance and a $4,160 favorable direct labor efficiency variance. What is the actual total direct labor cost for the current period A. $422,240 B. $426,400 C. $401,440 D. $430,560 E. $409,760

2.Markson Company had the following results of operations for the past year:

Sales (8,000 units at $20.40) $163,200

Variable manufacturing costs $87,600

Fixed manufacturing costs 15,400

Variable selling and administrative expenses 13,600

Fixed selling and administrative expenses 20,400 (137,000)

Operating income $26,200

A foreign company whose sales will not affect Markson's market offers to buy 2,000 units at $14.60 per unit. In addition to variable manufacturing costs, selling these units would increase fixed overhead by $1,640 for the purchase of special tools. If Markson accepts this additional business, its profits will:

A. Decrease by $1,640 B. Increase by $2,260 C. Decrease by $5,050 D. Increase by $3,900 E. Decrease by $5,540

Holo Company reported the following financial numbers for one of its divisions for the year; average total assets of $6,000,000; sales of $5,975,000; cost of goods sold of $3,425,000; and operating expenses of $1,227,000. Compute the division's return on investment:

A. 22.1% B. 20.5% C. 22.1% D. 15.2% E. 19.5%

Explanation / Answer

1 Answer A is correct : Total Actual Direct Labor cost is $422240 Standard Labor Cost 416000 Add: Unfavorable variance of labor rate 10400 Less: Favorable variance of efficiency variance 4160 Actual Total Direct Labor Cost         422,240 2 Answer B is correct , profit will increase by $ 2260 Additional Revenue           29,200 Less: Additional Variable Cost Variable Manufacturing Overhead (87600/8000*2000+1640)           23,540 Variable Selling & Administrative Expenes (13600/8000)*2000 3400 Total Additional Cost           26,940 Profit will increase by             2,260 3 Answer A & C is correct , ROI is 22.1% Sales      5,975,000 Cost of Goods Sold      3,425,000 Operating Expenses      1,227,000 Income      1,323,000 Average Assets      6,000,000 Return one assest (1323000/6000000) 22.1%

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