QUESTION 9

The 2020 income statement for the East Division of Procter Wells Company is as follows:

Sales $1,800,000

Operating expenses 1,380,000

Net operating income 420,000

Interest expense 120,000

Earnings before taxes 300,000

Income tax expense (40%) 120,000

Net income $ 180,000

This divisions invested capital is $4,000,000. How much is the East Divisions return on investment?

		5.7%
		7.5%
		10.5%
		6.3%

QUESTION 10

Steep, Inc. budgeted 6,000 cup holders for March. Each holder is sold for $12. Actual production for March was 6,300 cup holders. Standards and actual costs follow for March:

	Standards	Actual
Materials	1.1 pounds @ $2.40 a pound	6,400 pounds purchased for $15,040; 6,450 pounds used
Labor	0.10 hours @ $14.00 per hour	620 hours @ $14.30 per hour
Variable overhead	$16,800	$18,400
Fixed overhead	$9,600	$10,300

How much is the labor rate variance?

		$280 favorable
		$186 unfavorable
		$140 favorable
		$46 unfavorable

QUESTION 11

Hardigree Insurance has collected the following information over the last six months.

Month Units produced Total costs

March 2,000 $6,700

April 3,200 9,400

May 2,200 7,100

June 3,000 9,500

July 2,800 8,000

August 1,100 6,600

Using the high-low method, what is the estimated total cost in a month when 3,100 units are produced?

		$6,975
		$6,932
		$9,175
		$4,732

QUESTION 12

Winslow Carpet produces and sells carpet by the yard with a variable cost of $16 per yard. Total fixed costs are $280,000. The following chart represents the estimated demand at various price levels.

Yards Demanded Unit Price

57,000 $25

67,500 $24

72,500 $23

86,000 $21

Which price will generate the largest profit for Winslow Carpets?

		$23
		$25
		$21
		$24

QUESTION 13

Which of the following is most likely to be a variable cost?

		Factory janitor salaries
		Rent of a factory building
		Direct material
		Total costs of producing products