1-)The owner of the Prue Leith Jewerly Manufacturing Company has recently expanded her business in order to add an additional product line. In addition to designer necklaces, the company now sells designer glass frames. The company has a minimum rate of return of 20%.

Necklaces Glass Frames

Sales $3,952,000 $3,943,000

Controllable margin 2,539,200 4,354,560

Average operating assets 7,935,000 12,096,000

Compute the residual income for both investment centers.

Necklaces $5,395,800 and Glass Frames $7,741,440

Necklaces $952,200 and Glass Frames $1,935,360

Necklaces $3,983,000 and Glass Frames $8,153,000

Necklaces $952,200 and Glass Frames $7,741,440

2-) If sales are $3,914,000, controllable margin is $2,161,620 and the average investment center operating assets are $8,006,000, the return on investment is

27%

17%

14%

49%

3-) Jennings Manufacturing recorded operating data for its shoe division for the year.

Sales $1,500,000

Contribution margin 300,000

Controllable fixed costs 180,000

Average total operating assets 600,000

How much is the controllable margin for the year?

20%

$300,000

50%

$120,000

4-)The master budget of Windy Co. shows that the planned activity level for next year is expected to be 50,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected:

Variable manufacturing overhead costs:

Indirect labor $720,000

Machine supplies 180,000

Indirect materials 210,000

Fixed manufacturing overhead costs:

Depreciation on factory building 150,000

Total manufacturing overhead $1,260,000

A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of

$1,260,000.

$1,512,000.

$1,362,000.

$1,482,000.

5-) Wright Steel Co. budgeted manufacturing costs for 50,000 tons of steel are:

Fixed manufacturing costs $50,000 per month

Variable manufacturing costs $12.00 per ton of steel

Wright produced 40,000 tons of steel during March. How much is the flexible budget for total manufacturing costs for March?

$480,000

$520,000

$530,000

$650,000