Ebrahim Wares is a division of a major corporation. The following data are for the latest year of operations: Sales $14,720,000 $1,000,960 Net operating income Average operating assets The company's minimum required rate of return $4,000,000 14% Required: a. What is the division's margin? (1/2 mark) b. What is the division's turnover? (1/2 mark) c. What is the division's return on investment (ROI)? (1/2 mark) d. What is the division's residual income? (1 mark) e. Which of the two measures in c and d above is a better measure of performance and why? (1.5 mark) Question Completion Status: Total expenses No. of Clients (0) $37.200 $11110 3,300 The actual results for February were as follows: Revenue Wages and salaries Foods and supplies Facility expenses Administrative expenses No. of Clients (0) $124,830 $28,818 $44,652 $24,218 $7,886 3,340 a. Required: Prepare a flexible budget for Al Khaznah Hospital for February (2 Marks) Prepare a performance report for revenue and spending variances for February indicating whether they are Favourable (E) or Unfavourable (u)14 Marks) c. Why is the flexible budget more useful than the static budget for assessing efficiency of managers? (1 Mark) b. Zahid Company manufactures two different product lines. Model X and Model Continents for the The following per unit data apply: Model Modely Selling price $100 $120 Direct materials 25 20 Direct labor 40 Variable manufacturing overheads 20 30 Fixed manufacturing overheads 10 10 Note: Model X needs 2 machine hours per unit and Modely needs machine hours per unit Required: a. For each model compute the contribution margin per unit. (2 marks b. For each model, compute the contribution margin per machine-hour (2 marks) C. If there is excess capacity and no constraint, which model is the most profitable to producer Why? (1 marks) d. If there is a machine breakdown and machine hours are limited, which model is the most profitable to produce and why? (marks e. Suppose total number of machine hours are limited to 300 hours and maximum demand for the Model X and Model Yis only 100 osech. How many units of product and will be produced in order to maximize profit (1 marks)
