answer the following questions 17. The master budget of Windy Co. shows that the
ID: 2523175 • Letter: A
Question
answer the following questions
17. The master budget of Windy Co. shows that the planned activity level for nex expected to be 50,000 machine hours. At this level of activity, the following ma overhead costs are expected: nut Indirect labor Machine supplies Indirect materials Depreciation on factory building Total manufacturing overhead $720,000 180,000 210,000 150,000 $1260,000 A flexible budget for a level of activity of 60,000 machine hours would s manufacturing overhead costs of a. $1,482,000. b. $1,260,000. c. $1,512,000. d. $1,362,000. 18. Power Manufacturing recorded operating data for its shoe division for the year Sales Contribution margin Controllable fixed costs Average total operating assets $1,500,000 300,000 180,000 600,000 How much is controllable margin for the year? a, 20% b. 50% C. $300,000 d. $120,000 Monte, Inc. recorded operating data for its Sandtrap division for the year. M its return to be 9%. 19. Sales Controllable margin Total average assets Fixed costs $1,000,000 180,000 600,000 60,000 How much is ROl for the year? a. 10% b. 17% C. 20% d. 30%Explanation / Answer
Answers
Under flexible budget, variable cost changes with level activity. In given question, except for Depreciation ($150000), all are variable manufacturing overhead.
Variable overhead for 50000 machine hours = 1260000 – 150000 = $1,110,000
Variable overhead for 60000 machine hours = (1110000/50000) x 60000 = $1,332,000 (A)
Fixed overhead = depreciation = $150,000 (B)
Total manufacturing Overhead (A+B) = 1332000 + 150000 = $1,482,000
Hence, correct answer is Option (a) $1,482,000
Controllable margin = Contribution margin (-) Controllable fixed cost
= 300000 – 180000 = $120,000
Correct answer is Option (d) $120,000
Net operating income = Controllable margin (-) Fixed cost = 180000 – 60000 = $120,000
ROI = Net operating income / Average asset = 120000/600000 = 20%
Correct answer is Option (c) 20%
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