Question

24) Eel Electronics Corporation uses a standard cost system for the production of its water ski radios. The direct labor standard for each radio is 0.9 hours. The standard direct labor cost per hour is $7.20. During the month of August, Eel's water ski radio production used 6,600 direct labor-hours at a total direct labor cost of $48,708. This resulted in production of 6,900 water ski radios for August. What is Eel's labor rate variance for August? A) $1,188 Unfavorable B) $2,808 Unfavorable C) $972 Favorable D) $2,160 Favorable 25) Last year Common Carp Company had sales of $600,000, a turnover of 3.6, and a return on investment of 18%. The company's net operating income for the year was: A) $15,000 B) $108,000 C) $166,667 D) $30,000 The Arapaima Corporation, a merchandising firm, has budgeted its activity for December according to the following information Sales at $550,000, all for cash The cash balance at December 1 was $25,000. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash. All purchases are paid for in cash. 26) The budgeted cash receipts for December are: A) $585,000 B) $550,000 C) $412,500 D) $137,500

Answer 1

	24)	labor rate variance
		(actual rate - standard rate)*actual hours
		(48,708    - 7.2*6600)
		1188	U
		option a
	25)	turnover = sales/average operating assets
		3.6 =600,000/average operating assets
		thus average operating assets = 600,000/3.6
					166666.7
		ROI   = net operating income/aveerage operating assets
		.18       = x/166667
		x           = 166667*.18
			30000
		option d)
	26)	option b)$550,000
		$575,000 is the total cash receipt