Mount Royal Corporation has two divisions: the Alpha Division and the Beta Divis

Question

  Mount Royal Corporation has two divisions: the Alpha Division and the Beta Division. The  

             Beta Division has sales of $580,000, variable expenses of $301,600, and traceable fixed

             expenses of $186,500. The Alpha Division has sales of $510,000, variable expenses of

             $178,500, and traceable fixed expenses of $222,100. The total amount of common fixed

             expenses not traceable to the individual divisions is $158,400. What is the company's net

             operating income?
            A. $374,400
            B. $201,300
            C. $609,900

            D. ($34,200)

            E. $42,900

.   The following costs appear in Bobblehead’s Company's flexible budget at an activity level

        of 12,000 machine-hours:

                                                             Total Cost

           Indirect materials…….........       $7,800

           Factory rent………………..     $18,000

          What would be the flexible budget amounts at an activity level of 9,600 machine-hours

          if indirect materials is a variable cost and factory rent is a fixed cost?

                    Indirect Materials     Factory Rent

    $7,800                 $14,400

    $9,750                 $18,000

    $6,240                 $14,400

    $6,240                 $18,000

    $7,020                 $20,000

Santa Ana Corporation has computed the following unit costs for the year just ended:                       

Direct material used

$45

Direct labor

24

Variable manufacturing overhead

35

Fixed manufacturing overhead

40

Variable selling and administrative cost

17

Fixed selling and administrative cost

32

Direct material used

$45

Direct labor

24

Variable manufacturing overhead

35

Fixed manufacturing overhead

40

Variable selling and administrative cost

17

Fixed selling and administrative cost

32

Explanation / Answer

E. $42,900
Total sales- 1,090,000
Total Variable Expenses (480,100)
Total Traceable Fixed Expenses (408,600)
Non Traceable Fixed Expenses (158,400)
Net operating Income $42,900

For 9,600 machine-hours:
Variable cost per unit is same, Therefore Indirect materials = 7800/12000*9600 = $6,240
Fixed cost in total is constant Thus, Factory Rent = $18,000

$6,240                 $18,000

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