Question
Q5 Amos Manufacturing has two major departments. Management wants to compare their relative performance. Information related to the two departments is as follows: Department 1:
Q5 Amos Manufacturing has two major departments. Management wants to compare their relative performance. Information related to the two departments is as follows:
Department 1: | |
Sales: | $400,000 |
Expenses: | 250,000 |
Asset investment: | 950,000 |
Department 2: | |
Sales: | $75,000 |
Expenses: | 45,000 |
Asset investment: | 400,000 |
Which department is most efficient at using their operating assets to generate sales (asset utilization)?
a. Department 1
b. Department 2
c. Both departments have the same asset utilization
Q6 Amos Manufacturing has two major departments. Management wants to compare their relative performance. Information related to the two departments is as follows:
Department 1: | |
Sales: | $400,000 |
Expenses: | 250,000 |
Asset investment: | 950,000 |
Department 2: | |
Sales: | $75,000 |
Expenses: | 45,000 |
Asset investment: | 400,000 |
Amos currently requires investments to meet a rate of return on asset investment of 7%. Which division has the greatest level of residual income?
a. Department 1
b. Department 2
c. Both departments have the same residual income
Q7
Budgeted Production: | 7,000 units |
Standard Direct Labor rate: | $20/hour |
Standard Direct Labor usage: | 6 hours/unit |
Standard Direct Material price: | $1,300/cart |
Standard Direct Material usage: | 0.25 cart/unit |
Standard Variable Overhead rate: | $25/direct labor hour |
Actual Production: | 6,800 units |
Actual Direct Labor rate: | $24/hour |
Actual Direct Labor Usage: | 23,000 hours |
Actual Direct Material price: | $890/cart |
Actual Direct Material usage: | 1,200 carts (amounts used and purchased are the same) |
Actual Variable Overhead incurred: | $900,000 |
What is the Direct Material Static Budget Variance?
a. $1,068,000 Favorable
b. $1,207,000 Favorable
c. $2,275,000 Favorable
d. $3,068,000 Favorable
Q8 What is capital budgeting?
a. Planning short-term investments in productive assets
b. Planning long-term investments in productive assets
c. Planning long-term investments in current liabilities
d. None of the above
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