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a. The management of Nixon Corporation is investigating purchasing equipment that would cost $552,000 and have a 7 year life with no salvage value. The
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The management of Nixon Corporation is investigating purchasing equipment that would cost $552,000 and have a 7 year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $381,000 per year and cash operating expenses by $219,500 per year. (Ignore income taxes.) Required: Determine the simple rate of return on the investment(Round your answer to 1 decimal place.) Simple rate of retum %6 The following standards for variable overhead have been established for a company that makes only one product: Standard hours per unit of output Standard variable overhead rate 5.8 hours $ 14.00 per hour The following data pertain to operations for the last month: Actual hours Actual total variable overhead cost Actual output 9, 300 hours $ 125, 130 1,590 units Required: a. What is the variable overhead rate variance for the month? b. What is the variable overhead efficiency variance for the month? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) a. Variable overhead rate variance b. Variable overhead efficiency variance
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