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1. Jim s Landscaping is in a business of maintaining and improving yards in the surrounding areas. The company bases its overhead cost budgets on the following data:

Supplies \$4 per yard

Machine maintenance \$2 per yard

Chemicals \$6 per yard

Salaries and wages \$2,300 per month

Depreciation \$800 per month

Utilities \$400 per month

Rent \$1,100 per month

In June the following actual costs were incurred for 83 yards:

Supplies \$320

Machine maintenance \$180

Chemicals \$500

Salaries and wages \$2,500

Depreciation \$800

Utilities \$450

Rent \$1,100

Construct a flexible budget performance report using the data provided: Show computations

2. Banner Inc bases its variable overhead performance report on the actual direct labor hours of the period. Data concerning the most recent year that ended on December 31 are as follows:

Budgeted direct labor hours 12,000

Actual direct labor hours 13,500

Standard direct labor hours allowed 13,000

Cost formula (per direct labor hours):

Indirect labor \$0.85

Supplies \$0.30

Electricity \$0.15

Actual costs incurred:

Indirect labor \$11,600

Supplies \$4,000

Electricity \$2,050

Management would like to compute both the spending and the efficiency variances for the variable overhead in the company s variable overhead performance report. Prepare a variable overhead performance report with both the variable overhead spending and the efficiency variances. Show computations and details.

3. Photos Inc has a standard cost system in which it applies overhead to products based on the standard direct labor hours allowed for the actual output of the period. Data concerning the most recent year appears below:

Total budgeted fixed overhead cost for the year \$250,000

Actual fixed overhead cost for the year \$265,000

Budgeted standard direct labor hours 40,000

Actual direct labor hours 41,000

Standard direct labor hours allowed for the actual output 40,800

a. Compute the fixed portion of the predetermined overhead rate for the year. Show computations

b. Compute the fixed overhead budget and volume variances. Show computations

4. Grater Inc sells product A and product B. Revenue and cost information relating to the products follow:

Product A Product B

Selling Price per unit \$48.00 \$65.00

Variable expenses per unit \$24.50 \$29.20

Traceable fixed expenses per year \$144,000 \$101,500

Common fixed expenses in the company total \$390,000 annually. Last year the company produced and sold 10,000 of Product A and 15,000 of Product B.

Prepare a contribution format income statement for the year segmented by product lines. Show details clearly.

5. Selected sales and operating data for three divisions of three different companies are given below:

Division X Division Y Division Z

Sales \$900,000 \$750,000 \$600,000

Average operating assets \$600,000 \$150,000 \$200,000

Net operating income \$54,000 \$30,000 \$10,000

Minimum required rate of return 10% 16% 8%

a. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. Show computations

b. Compute the residual income for each division. Show computations

c. Under which of these methods would they accept an opportunity with a 15% return. Show computations and details

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