Question

QUESTION 27

1. Company R has produced the following variance analysis report. If Company R has a policy to investigate variances over 10% of the flexible budget, which variances should be investigated?

   	Actual	Flexible budget	Budget Variance		Price Variance		Quantity Variance
   DM	$78,580	$88,000	($9,420)	F	$1,200	U	($10,620)	F
   DL	$123580	$145,000	($21,420)	F	($2,650)	F	($18,770)	F
   VOH	$126,860	$119,000	$7,860	U	($5,560)	F	$2,300	U

   
   

   		The direct materials quantity variance and the direct labor efficiency variance.
   		The direct materials price variance and the direct materials quantity variance.
   		The direct materials quantity variance and the variable overhead efficiency variance.
   		The direct labor rate variance and the direct labor efficiency variance.

QUESTION 36

1. The current pretax income for Coretax is $40,000 (tax rate is 30%), with an average asset base of $120,000 and an expected return of 15 percent or higher. The ROI for Coretax would amount to:

   		23.3%
   		33.3%
   		15%
   		66.7%

QUESTION 38

1. Assume the following information for a product line:

   Sales revenue	$1,500,000
   Variable manufacturing costs	140,000
   Fixed manufacturing costs	160,000
   Variable selling/administrative costs	130,000
   Fixed selling/administrative costs	90,000
   What is the product line's segment income?

   		$980,000
   		$1,200,000
   		$1,230,000
   		$1,250,000

QUESTION 39

1. The Rubber Division of Morgan Company manufactures rubber moldings and sells them externally for $50. At the current level of production, its  variable cost is $20 per unit, and its fixed cost per unit is $7. Morgan's president wants the Rubber Division to transfer 5,000 units to another company division. Assuming the Rubber Division has available capacity for 5,000 additional units, the economic rule would set transfer price as:

   		$27.
   		$50.
   		$7.
   		$20.

Answer 1

27). As per the given data,

Direct material quantity variance can be computed as

Quantity variance amount. = $10,620

Flexible budget amount. = $88,000

%of variance is. = 12.068%

Also,

Direct labour efficiency can be computed as:

Quantity variance amount. = $ 18,770

Budget amount. = $ 145,000

%of variance is. = 12.9%

Therefore, the answer is direct material quantity variance and direct labour efficiency variance.

36). ROI. = 23.3%

Net income = pre tax income * (1-tax%)

= $ 40,000*(1-30%) = $ 28,000

ROI = net income /average asset

= $ 28,000/$120,000. = 23.33%

38). product line segment income is $ 980,000

Sales revenue. $1,500,000

Less:variable expenses:

Variable manufacturing costs. $140,000

Variable selling and administration costs $130,000

Contribution margin. $ 1,230,000

Less:Fixed costs:

Fixed manufacturing costs. $ 160,000

Fixed selling and adminstration costs. $ 90,000

product line segment income. $ 980,000

39).

Answer is $20

Explanation:

since, the rubber division has spare capacity for5000 units, itcan transfer tu its at variable cost I. E, $ 20