i) Budget Actual

Direct Labour Costs $360,000 $420,000

Direct Labour Hours 25,000 26,500

Overhead Costs $600,000 $693,000

Beginning Ending Work in Progress $ 14,000 $ 20,000

Finished Goods $ 31,000 $ 35,000

Materials $ 10,000 $ 0

Overhead is allocated on Direct Labour costs.

Materials Purchased during the year were $208,000. All materials are Direct Materials. 1

1. The amount of Materials applied to WIP is closest to:

A. 198,000

B. 208,000

C. 218,000

D. 228,000

2. The amount of overhead applied to WIP is closest to:

A. 600,000

B. 633,333

C. 636,000

D. 693,000

E. 700,000

3. Cost of Goods Manufactured is closest to:

A. 1,232,000

B. 1,258,000

C. 1,268,000

D. 1,328,000

E. 1,332,000

4. Cost ofGoods Sold (before any under/over applied overhead adjustment) is closest to:

A. 1,232,000

B. 1,258,000

C. 1,268,000

D. 1,328,000

E. 1,332,000

5. The amount of under/over applied Manufacturing Overhead is closest to:

A. 4,000 over applied

B. 7,000 over applied

C. 7,000 under applied

D. 93,000 over applied

E. 93,000 under applied

ii)The following information is for questions 6 and 7:

Sales $900,000

Operating Income $36,000

Shareholders' Equity $100,000

Average Operating Assets $180,000

Minimum Required Rate of Return 15% 23.

6. What is the residual income?

A. $9,000. 36,000 - 180,000 *.15 = $9,000.

B. $21,000.

C. $24,000.

D. $45,000.

7. What is the return on investment (ROI)?

A. 4%.

B. 15%.

C. 20%.

D. 36%.