7. Dybala Corporation's produces and sells a single product. Data concerning that product appear below: Per Unit Percent of Sales Selling price $180 100% Variable
7. Dybala Corporation's produces and sells a single product. Data concerning that product appear below: |
| Per Unit | Percent of Sales |
Selling price | $180 | 100% |
Variable expenses | 90 | 50% |
Contribution margin | $ 90 | 50% |
The company is currently selling 5,300 units per month. Fixed expenses are $420,100 per month. The marketing manager believes that a $6,300 increase in the monthly advertising budget would result in a 160 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change? |
-Increase of $8,100
-Decrease of $8,100
-Decrease of $6,300
-Increase of $14,400
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19. The following standards for variable overhead have been established for a company that makes only one product: |
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Standard hours per unit of output | 6.5 | hours |
Standard variable overhead rate | $13.00 | per hour |
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The following data pertain to operations for the last month: |
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Actual hours | 9,800 | hours |
Actual total variable overhead cost | $125,200 |
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Actual output | 1,500 | units |
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Required: | |
a. | What is the variable overhead rate variance for the month? (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.) |
b. | What is the variable overhead efficiency variance for the month? (Input the amount as a positive value. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance.) |
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25. Chee Corporation has gathered the following data on a proposed investment project: (Ignore income taxes in this problem.) |
Investment required in equipment | $450,000 |
Annual cash inflows | $90,000 |
Salvage value | $0 |
Life of the investment | 10 years |
Required rate of return | 7% |
The company uses straight-line depreciation. Assume cash flows occur uniformly throughout a year except for the initial investment. |
The payback period for the investment is closest to: |
-0.2 years
-1.0 years
-3.0 years
-5.0 years
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