Question
58. Use the following information to compute residual income: Sales $ 331,000 Operating income $ 54,500 Average current assets $ 261,000 Cost of capital 9
58. Use the following information to compute residual income:
Sales | $ | 331,000 | ||
Operating income | $ | 54,500 | ||
Average current assets | $ | 261,000 | ||
Cost of capital | 9 | % | ||
Return on investment | 20 | % | ||
$2,300.
$23,490.
$66,200.
$29,975.
59.
The following information summarizes the standard cost for producing one metal tennis racket frame at Spaulding Industries. In addition, the variances for one month's production are given. Assume that all inventory accounts have zero balances at the beginning of the month.
Standard Cost Per Unit | Standard Monthly Costs | ||||||
Materials | $ | 4.30 | $ | 8,600 | |||
Direct Labor 2 hrs. @ $2.50 | 5.00 | 10,500 | |||||
Factory Overhead: | |||||||
Variable | 1.70 | 3,570 | |||||
Fixed | 5.00 | 10,500 | |||||
$ | 16.00 | $ | 33,170 | ||||
Variances: | |||
Material price | 330.00 | unfavorable | |
Material quantity | 860.00 | unfavorable | |
Labor rate | 600.00 | favorable | |
Labor efficiency | 2,200.00 | unfavorable | |
What was the actual price paid for the direct material during the month, assuming all materials purchased were put into production?
$4.45.
$4.90.
$4.69.
$4.30.
60. Martin Company currently manufactures all component parts used in the manufacture of various hand tools. The Extruding Division produces a steel handle used in three different tools. The budget for these handles is 136,000 units with the following unit cost.
Direct material | $ | 0.92 | |
Direct labor | 0.56 | ||
Variable overhead | 0.58 | ||
Fixed overhead | 0.20 | ||
Total unit cost | $ | 2.26 | |
Polishing Division purchases 15,000 handles from the Extruding Division and completes the hand tools. An outside supplier, Venture Steel, has offered to supply 15,000 units of the handle to Polishing Division for $2.18 per unit. The Extruding Division currently has idle capacity that cannot be used. What is the cost impact to Martin as a whole of purchasing from Venture Steel? (CMA adapted)
decrease the handle unit cost by $0.70.
increase the handle unit cost by $0.08.
increase the handle unit cost by $0.12.
decrease the handle unit cost by $0.12.
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