QUESTION 2

A time-and-motion study revealed that it must take 3 hours to produce a product that currently takes 7 hours to produce. The job is $9 an hour.

a) Non-value added costs are

Mason Company keeps 20 days of material inventory on hand to avoid downtime due to material shortages. Transportation costs average $4,000 per day. Bach, Inc., a competitor, keeps 10 days of inventory on hand, and the average competitor's transportation costs $2,000 per day.

b) Value-added costs are (be sure to clearly label each answer and show all work)

QUESTION 13

Captial Corporation is studying a capital investment proposal in which newly acquired assets will be depreciated using the straight-line (SL) method with no salvage value. Which one of the following statements about the proposal would be incorrect if, instead of SL, the Modified Accelerated Cost Recovery System (MACRS) is used for determining depreciation expense for income tax purposes? (Assume that income tax rates are constant over the life of the assets involved.)

	a.	The internal rate of return (IRR) of the project would likely increase.
	b.	Total tax payments over the life of the project would be unaffected.
	c.	The estimated net present value (NPV) of the project would increase.
	d.	The payback period for the investment would be shortened.
	e.	The totalafter-tax income from this project, over its life, would normally increase.

QUESTION 20

Bike Pedals manufactures bicycle seats. The company budgeted to manufacture 25,000 seats in April, with 0.05 standard machine hours per seat. Total variable factory overhead was budgeted at $30,000 for April. During April, the company manufactured 30,000 seats using 1,600 machine hours. It incurred $34,000 of variable factory overhead (VOH) costs.

Required: Determine each of the following variances. 1. Variable overhead spending variance. 2. Variable overhead efficiency variance. 3. Variable overhead flexible budget variance.