Actual machine hours		880
Standard machine hours allowed		980
Denominator activity (machine hours)		1,050
Actual fixed overhead costs	$	4,600
Budgeted fixed overhead costs	$	5,250
Predetermined overhead rate ($1 variable + $5 fixed)	$	6

What is the production volume variance?

$350.

$600.

$500.

$650.

11. The Country Garden Company's current net operating income is $17,820 and its average operating assets are $81,000. The Country Garden's required rate of return is 19%. A new project being considered would require an investment of $13,000 and would generate annual net operating income of $2,730. What is the residual income of the new project?

$519.

$(130).

$260.

$916.

12. The Dry Wall Division reports the following operating data for the past two years:

		Year 1				Year 2
Margin		14	%			?
Turnover		3.9				4
Average operating assets		?			$	157,000
Net operating income	$	47,000				?
Stockholders equity	$	87,000			$	132,000
Sales		?				?

The return on investment at the Dry Wall Division was exactly the same in Year 1 and Year 2. The margin in Year 2 was:

56%.

55%.

7%.

14%.