The West Division occupies 11,000 square feet in the plant. The East Division oc
ID: 2478577 • Letter: T
Question
The West Division occupies 11,000 square feet in the plant. The East Division occupies 6,600 square feet. Rent, which was $ 88,000 for the year, is an indirect expense and is allocated based on square footage. Compute operating income for the West Division.
$222,000.
$166,000.
$183,000.
$168,000.
$167,000.
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Summerlin Company budgeted 5,400 pounds of material costing $6.00 per pound to produce 2,100 units. The company actually used 5,900 pounds that cost $6.10 per pound to produce 2,100 units. What is the direct materials price variance?
$3,000 unfavorable.
$540 unfavorable.
$590 unfavorable.
$3,050 unfavorable.
$3,590 unfavorable.
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$23,300 unfavorable.
$40,800 favorable.
$23,300 favorable.
$17,500 unfavorable.
$40,800 unfavorable.
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Fallow Corporation has two separate profit centers. The following information is available for the most recent year:Explanation / Answer
1) West Division Sales (net) 440000 Less; Cost of goods sold 152000 Gross Profit 288000 Less : operating expenses Salary expense 50000 Rent expense 55000 refer working Operating income 183000 Rent expense 88000 total square feet (11000 + 6600) 17600 Area of west division 11000 Rent allocated to west division (11000 /17600*88000) 55000 Hence 3rd option is correct 2) Material Price variance = ( Actual price - standard price ) * actual quantity = ( 6.10 - 6) * 5900 = 0.10 * 5900 = 590 unfavourable Hence 3rd option is correct 3) Material Price variance = ( Actual price - standard price ) * actual quantity = ( 402500/158000 - 2.40) * 158000 = ( 2.55 - 2.40) * 158000 = 0.15 * 158000 = 23300 unfavourable Hence 1st option is correct
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