1.

Smithy Company produces hockey helmets. The standard cost for each helmet is as follows:

Direct material Direct labor Overhead

5.0 lbs at $4.00/lb. 2.0 hrs @ $16.00/hr.

$20.00 $32.00 $10.00

During November, 2,000 helmets were produced. 10,600 lbs. of material were purchased and used during November, at a total cost of $44,520. Labor worked 3,870 hours at a total cost of $61,146. Actual overhead was $21,900. The overhead cost of $10.00 per helmet was determined using an estimated monthly fixed overhead of $13,200 and a variable overhead of $4.00 per helmet.

What is the labor rate variance? $_______________ What is the labor efficiency variance? $_______________ What is the materials price variance? $_______________ What is the materials quantity variance? $_______________

2.

Edy's, Inc. wants to purchase of a new ice cream truck with a cost of $51,000. Edy's has a cost of capital of 7.4% and a required rate of return of 10.4%. Its income tax rate is 32%. The acquisition is proposed for January 1, 2011. Edy's expects it can sell the truck for $7,000 at end of its useful life of 4 years. Edy's estimates the following incremental amounts to be generated by the truck:

Year 1 Net income $4,200 Operating cash flows 15,200

Year 2 $5,600 16,600

Year 3 $6,100 17,100

Year 4 $5,800 16,800

How much is accounting rate of return?

A. 14.48% B. 56.64% C. 10.64% D. 18.71% E. Some other answer

3.

Checks Experts sells checks and deposits slips to businesses. The company