4. The following data are taken from the management accounting reports of Dulcim

Question

4. The following data are taken from the management accounting reports of Dulcimer Co. Div. A Div. B Income from operations Total service department charges Div. C $1,900,000 $1,450,000 $1,450,000 1,100,000 1,700,000 1,050,000 If an incentive bonus is paid to the manager who achieved the highest income from operations before service department charges, it follows that: a. Division C's manager is given the bonus b. The managers of Divisions B and C divide the bonus c. Division A's manager is given the bonus d. Division B's manager is given the bonus Favorable volume variances may be harmful when: a. b. c. d. 5. machine repairs cause work stoppages production in excess of normal capacity cannot be sold supervisors fail to maintain an even flow of work all of the above

Explanation / Answer

Answer =1 Division A Division B Division C Income from operation =                       19,00,000         14,50,000                  14,50,000 Income from operation before service charges are same for both Division B and Division C, means the bonus   will distribute between Division B and Division C   Answer = Option B = Tha manager of the Division B and C divide the Bonus Answer =2 Favourable Volume variance means the production is more then the expected production When the production is more but sale is not with the matching with this then the inventory   will held more. As per the above correct option is the B Answer = Option B= Production in excess of normal capacity cannot be sold

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