Item 24

Milar Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate
Direct materials		7.5	pounds	$	7.00	per pound
Direct labor		0.8	hours	$	27.00	per hour
Variable overhead		0.8	hours	$	12.50	per hour

In January the company produced 3,380 units using 13,520 pounds of the direct material and 2,824 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $14,280. The actual direct labor cost was $75,841 and the actual variable overhead cost was $33,828.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.

The labor rate variance for January is:

Multiple Choice

• $407 F
• $407 U
• $2,833 U
• $2,833 F

24B.

Cabell Products is a division of a major corporation. Last year the division had total sales of $11,650,000, net operating income of $1,141,700, and average operating assets of $3,495,000. The company's minimum required rate of return is 11%.

The division's margin is closest to:

Multiple Choice

• 9.8%
• 32.7%
• 89.1%
• 30.0%

24C.

Cabell Products is a division of a major corporation. Last year the division had total sales of $25,420,000, net operating income of $1,974,320, and average operating assets of $6,100,000. The company's minimum required rate of return is 12%.

The division's turnover is closest to:

Multiple Choice

• 12.88
• 4.17
• 0.32
• 2.70