1.12

sales 185,000

operating income 60,000

operating 375,000

the manager can invest in an additional project that would require $40,000 an additional assets and would generate 6,000 of additional income. the companys minimum rate of return is 14%

which of the following statements is true

a.If the manager invests in the additional project, ROI of the division will decrease.

b. The residual income of the project is less than the residual income of the division without the project; therefore the project will be rejected.

c. Average investment for Stock Division will decrease if the project is accepted for investment.

d. If the manager invests in the additional project, residual income of the division will increase.

e. None of these

2.13

Pericloud Company uses a standard costing system. The following information pertains to direct materials for July:

Standard price per lb. $20.00

Actual purchase price per lb. $18.00

Quantity purchased 2,000 lbs.

Quantity used 1,400 lbs.

Standard quantity allowed for actual output 1,440 lbs.

actual output 500 units

Pericloud Company reports its materials price variances at the time of purchase. What is the materials usage variance for Pericloud Company?

a.$800 F

b.$1,900 F

c.$1,000 F

d.$950 U