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31) KHLI is a division of a large company. Last year, the division had total sales of $21,300,000; net operating income of $575,100; and the
31) KHLI is a division of a large company. Last year, the division had total sales of $21,300,000; net operating income of $575,100; and the average operating assets of $5,000,000. The company's minimum required of return is 12%. The division's return on investment (ROI) is ADOB a) 23% b) 11.5% c) 0.3% d) 2.2% 32) Which ONE of the following is correct about minimum transfer price? POOK a) Lowest price offered by the selling division. b) Lowest price offered by the buying division. c) Highest price offered by the buying division. d) Highest price offered by the selling division. 33) The Engine division provides engines to the Tractor division in a company. Engine division is currently producing below capacity. The following information pertains to Engine division. Market price $2,730 Direct materials 600 Direct labour 1,200 Variable overhead 300 150 Fixed overhead What would be the BEST transfer price to avoid transfer price problems? a) $1,350 b) $300 c) $900 d) $2,100 34) The following standards for labour have been established for a particular product: Standard labour hours per unit of output Standard labour rate 4 hours $12.30 per hour The following data pertain to operations concerning the product for the last month: Actual labour hours worked Actual labour cost Actual output What is the labour efficiency for the month? $13,530F b) $13,530U $1,500F d) $1,500U 7,100 hours $89,105 1,500 units 35) Using the information from Question 34. What is the labour rate variance for the month? a) $1,500F b) $1,500U c) $1,775F d) $1,775U 36) The standard units used to make a bag are 5 pieces of metal rivets each costing $10. During the production month, the following information was recorded: Bags produced: 12,000 Metal rivets purchased and used: 65,000 rivets at $11 each What is the material price variance? $65,000F $65,000U c) $50,000F $50,000U 37) Using the information from Question 36. What is the material usage variance for the month? a) $60,000F b) $60,000U 6306 c) $50,000F d) $50,000U Page 9 of 14
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