Problem 2 Crazy Inc. manufactures dress shirts and various other clothing items. The company uses standard costing and has developed the following information about standards for its product: Materials 5 feet per unit; $12 per foot Labor 3 DL hours per unit; $14 per hour Crazy Inc. planned for production of 550 dress shirts for the month of March. However, due to high demand, they actually produced 600 shirts. During March, they purchased 3,500 feet of materials at a total cost of $36,400. They actually used 2,850 feet of materials. The remaining 650 feet were unused and they expect to use them in the following month. During March, the assembly line workers actually worked a total of 1,650 direct labor hours. The total cost of direct labor was $20,150. Required: Compute the following: 1. Direct materials price variance. 2. Direct materials quantity variance. 3. Direct labor rate variance. 4. Direct labor efficiency variance. Problem 3 Spirit Inc. has provided us with the following information for its three divisions for the year 2015: Division A Division B Division C Sales 1,250,500 245,000 775,000 Operating Assets 1,425,000 500,000 985,000 Net Operating Income 189,000 84,500 145,500 The company has a minimum desired return of 8% and their tax rate is 30%. Required: 1. Compute the return on investment for each division. 2. Compute the residual income for each division.