1.

Use the information below to answer the following question(s):

Beta Shoe Ltd. manufactures only one type of shoe and has two divisions, the Sole Division, and the Assembly Division. The Sole Division manufactures soles for the Assembly Division, which completes the shoe and sells it to retailers. The Sole Division "sells" soles to the Assembly Division. The market price for the Assembly Division to purchase a pair of soles is $20. (Ignore changes in inventory.) The fixed costs for the Sole Division are assumed to be the same over the range of

40,000100,000

units. The fixed costs for the Assembly Division are assumed to be $7 per pair at 100,000 units.Sole's costs per pair of soles

are:

Direct materials	$4
Direct labour	$3
Variable overhead	$2
Division fixed costs	$1

Assembly's costs per completed pair of shoes

are:

Direct materials	$6
Direct labour	$2
Variable overhead	$1
Division fixed costs	$7

Assume the transfer price for a pair of soles is 180% of total costs of the Sole Division and 40,000 of soles are produced and transferred to the Assembly Division. The Sole Division's operating income is

A.$400,000.

B.$440,000.

C.$360,000.

D.$248,000.

E.$320,000

2.

Kid Adventures Company projected current year sales of 3,600 swing sets at a unit sale price of $225.00. Actual current year sales were 3,300 units at $215.00 per unit. Variable costs were budgeted at $166.00 per unit and actually cost $175.00 per unit. Budgeted fixed costs totaled $122,000, while actual fixed costs amounted to $118,000.

What is the Kid Adventures Company's sales volume variance for operating income?

A.$17,700 favourable

B.$17,700 unfavourable

C.$76,400 favourable

D.$76,400 unfavourable