The American Heart Association collects data on the risk of strokes

1.The American Heart Association collects data on the risk of strokes. A 10-year study provided data on how age (X1), blood pressure (X2), and smoking (X3) relate to the risk of strokes (Y). Assume that the following data are from a portion of this study. Risk is interpreted as the probability (times 100) that the patient will have a stroke over the next 10-year period. For the smoking variable (X3), define a dummy variable with 1 indicating a smoker and 0 indicating a nonsmoker.

(a) Construct a scattergram between Risk (Y) and the Age (X1). Does there appear to be a linear relationship?

(b) Estimate a simple linear regression between Y and X1. Briefly evaluate the estimated simple regression equation.

(c) Construct a scattergram between Risk (Y) and the Blood Pressure (X2). Does there appear to be a linear relationship?

(d) Estimate a simple linear regression between Y and X2. Briefly evaluate the estimated simple regression equation.

(e) Estimate a multiple linear regression between Y and X1, X2 & X3. Briefly evaluate the estimated multiple regression equation.

(f) Provide an interpretation of each estimated regression coefficient in part e.

(g) Is smoking a significant factor in the risk of a stroke based on the results of the estimated regression equation in part e? Briefly explain.

(h) Which estimated regression equation provides the "Best Fit" to the data? Briefly explain.

(i) Utilize the equation of "Best Fit" (see part h) to predict the Risk of a Stroke over the next 10 years for a 68-year old smoker who has blood pressure of 175? What action might the physician recommend for this patient?

2. Continuation of previous problem. The takeaway from the answers is that the multiple regression with square footage (x1),number of bedrooms (x2), and number of bathrooms (x3), and distance from City Center (x4) is a pretty good regression equation with an Rsquare =.384 Adjusted Rsquare = .359, the individual variables are all statistically significant and the F-Test indicates global statistical significance.

Rsquare of only .384 indicates that the estimated multiple regression equation is not explaining about 61.6 percent of the variation of sales price (dependent variable). The search continues for additional statistically significant explanatory variables.

If the home has a pool may be relevant in explaining the variation in the sales price of homes. A potential fifth explanatory variable has been provided (x5) to put together a multiple regression equation. Since presence of a pool (Yes or No) is a qualitative variable, a dummy variable has been set where a home with a pool (Yes) = 1 and pool (no) = 0.

(a) What is your expectation about the direction of the relationship between sales price and the pool dummy variable based on the coding scheme (Pool = 1, No Pool = 0)?

(b) Estimate the multiple regression equation (include square footage, number of bedrooms, number of bathrooms, distance from the center of the city, pool dummy variable).

(c) Conduct individual hypothesis tests (alpha=.05) to determine if any of the explanatory variables can be dropped from the estimated multiple regression equation.

(d) Conduct a global hypothesis test (F-Test) to verify the overall statistical significance (p-value =.05) of the estimated multiple regression equation in part b.

(e) Provide an interpretation of the estimated coefficient on the pool dummy variable.

(f) If any variables should be dropped from the multiple regression equation, re-run and repeat parts c and d and e (if applicable).

(g) Provide an overall written evaluation of your final multiple regression equation justifying your decision. Is the explanatory dummy variable pool worthwhile addition to the multiple regression equation?

(h) Based on the final regression equation, forecast the sales price for a home which is 3,950 square feet has 4 bedrooms and 3 bathrooms, is located 21 miles from the center of the city and has a pool (dummy variable 1).
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Management wants to design an assembly line that will turn out 360 units per day

Management wants to design an assembly line that will turn out 360 units per day. There will be eight working hours in each day. The industrial engineering staff has assembled the information below: 



Task
Time (sec.)
Immediate Predecessor
A
30
-
B
20
A
C
35
A
D
30
B
E
45
B
F
55
C,D
G
35
D,E
H
20
F,G

a. Determine the minimum, maximum, and calculated cycle time.
b. What is the minimum number of stations needed? 
c. Draw the precedence diagram. 
d.  Assign tasks to stations using this rule: assign tasks according to greatest number of following tasks. In case of a tie, use the tiebreaker of assigning task with the longest processing time first. (6 pts)
e. Calculate the efficiency of the system.

Problem 2: 

Following data is given:

          Weekly demand (d) = 140 units/week
          Ordering costs (S) = $20/order
          Holding costs (H) = $1/unit/year 
          Lead time = 6 weeks
          Number of weeks per year = 52 weeks


Suppose the firm uses the EOQ to control the inventory, answer following questions:
a. Determine EOQ? (round it to the nearest integer number) 
b. Find the length of an order cycle (in weeks)? (round it to the nearest integer number) 
c. If you use EOQ as order quantity, what would be the total costs? 
d. Find the reorder point (ROP)


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comprehensive problem 2 accounting cycle with subsidiary ledgers part 1 answers

COMPREHENSIVE PROBLEM 2: ACCOUNTING CYCLE WITH SUBSIDIARY LEDGERS, PART 1
During the second half of December 20-1, TJ’s Specialty Shop engaged in the following transactions:
Dec. 16 Received payment from Lucy Greene on account, $1,960.
16 Sold merchandise on account to Kim Fields, $160, plus sales tax of $8. Sale No. 640.
17 Returned merchandise to Evans Essentials for credit, $150.
18 Issued Check No. 813 to Evans Essentials in payment of December 1 balance of $1,250, less the credit received on December 17.
19 Sold merchandise on account to Lucy Greene, $620, plus tax of $31. Sale No. 641.
22 Received payment from John Dempsey on account, $1,560.
23 Issued Check No. 814 for the purchase of supplies, $120. (Debit Supplies)
24 Purchased merchandise on account from West Wholesalers, $1,200. Invoice No. 465, dated December 24, terms n/30.
26 Purchased merchandise on account from Nathen Co., $800. Invoice No. 817, dated December 26, terms 2/10, n/30.
27 Issued Check No. 815 in payment of utilities expense for the month of December, $630.
27 Sold merchandise on account to John Dempsey, $2,020, plus tax of $101. Sale No. 642.
29 Received payment from Martha Boyle on account, $2,473.
29 Issued Check No. 816 in payment of wages (Wages Expense) for the two-week period ending December 28, $1,100.
30 Issued Check No. 817 to Meyers Trophy Shop for a cash purchase of merchandise, $200.

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As of December 16, TJ’s account balances were as follows:
Account                                               Account No.                                      Debit                     Credit
Cash                                                                      101                                         $ 9,705
Accounts Receivable                                      122                                         10,256
Merchandise Inventory                                                131                                         21,800
Supplies                                                               141                                          1,035
Prepaid Insurance                                           145                                         1,380
Land                                                                      161                                         8,700
Building                                                                171                                         52,000
Accum. Depr.––Building                               171.1                                                                     $ 9,200
Store Equipment                                              181                                         28,750
Accum. Depr.––Store Equipment             181.1                                                                     9,300
Accounts Payable                                            202                                                                         3,600
Wages Payable                                                                 219
Sales Tax Payable                                             231                                                                         1,378
Mortgage Payable                                           251                                                                        12,525
Tom Jones, Capital                                          311                                                                         90,000
Tom Jones, Drawing                                       312                                         8,500
Income Summary                                            313
Sales                                                                      401                                                                         124,900

Sales Returns and Allowances                    401.1                                     $ 1,430
Purchases                                                           501                                         64,400
Purchases Returns and Allowances          501.1                                                                    $ 460
Purchases Discounts                                       501.2                                                                     698
Freight-In                                                            502                                         175
Wages Expense                                                                511                                         26,100
Advertising Expense                                       512                                         4,700
Supplies Expense                                             524
Telephone Expense                                        525                                         2,180
Utilities Expense                                              533                                        6,900
Insurance Expense                                          535
Depr. Expense—Building                              540
Depr. Expense––Store Equipment           541
Miscellaneous Expense                                                 549                                         2,700
Interest Expense                                             551                                         1,350
 $252,061             $252,061

TJ’s also had the following subsidiary ledger balances as of December 16:
Accounts Receivable Ledger
Customer                                                            Balance
Martha Boyle
12 Jude Lane
Hartford, CT 06117                                          $3,796
Anne Clark
52 Juniper Road
Hartford, CT 06118                                          2,100
John Dempsey
700 Hobbes Dr.
Avon, CT 06108                                                 1,560
Kim Fields
5200 Hamilton Ave.
Hartford, CT 06117                                          ––
Lucy Greene
236 Bally Lane
Simsbury, CT 06123                                         2,800
Accounts Payable Ledger
Vendor                                                                 Balance
Evans Essentials
34 Harry Ave.
East Hartford, CT 05234                                 $3,600
Nathen Co.
1009 Drake Rd.
Farmington, CT 06082                                    ––
Owen Enterprises
43 Lucky Lane
Bristol, CT 06007                                               ––
West Wholesalers
888 Anders Street
Newington, CT 06789                                     ––

At the end of the year, the following adjustments (a)–(g) need to be made:
(a, b) Merchandise inventory as of December 31, $19,700
(c) Unused supplies on hand, $525.
 (d) Unexpired insurance on December 31, $1,000
(e) Depreciation expense on the building for the year, $800.
(f) Depreciation expense on the store equipment for the year, $450.
(g) Wages earned but not paid as of December 31, $330.
REQUIRED—GENERAL JOURNAL
For those not using working papers:
1.       If you are not using the working papers, open a general ledger, an accounts receivable ledger, and an accounts payable ledger as of December 16. Enter the December 16 balance of each of the accounts, with a check mark in the Posting Reference column.
For working paper users and nonusers:

2.       Enter transactions for the second half of December in the general journal. Post immediately to the accounts receivable and accounts payable ledgers.
3.       Post from the journal to the general ledger
REQUIRED—SPECIAL JOURNALS
For those not using working papers:
1.       If you are not using the working papers:
a. Open a general ledger, an accounts receivable ledger, and an accounts payable ledger as of December 16. Enter the following December 16 balances in the general ledger accounts and place a check mark in the Posting Reference column.

Cash                                                                      $ 11,500
Accounts Receivable                                      7,823
Accounts Payable                                            6,850
Sales Tax Payable                                             933
Sales                                                                      116,000
Purchases                                                           60,500
Purchases Discounts                                       575

b. Enter the December 16 balances in the rest of the general ledger accounts, as indicated in the trial balance, and place a check mark in the Posting Reference column.

c. Enter the December 16 balances in the accounts receivable and accounts payable ledgers, as indicated in the subsidiary ledger account listings, and place a check mark in the Posting Reference column.

d. Insert Dec. 1–15, Cumulative Amount, and the following amounts in the special journal columns.
Sales Journal: Accounts Receivable Dr., 4,263; Sales Cr., 4,060; Sales Tax Payable Cr., 203.
Cash Receipts Journal: Accounts Receivable Cr., 1,830; Sales Cr., 4,840; Sales Tax Pay. Cr., 242; Cash Dr., 6,912.
Purchases Journal: Purchases Dr./Accts. Pay. Cr., 3,900.
Cash Payments Journal: General Dr., 1,680; Accounts Payable Dr., 7,150; Purchases Discounts Cr., 123; Cash Cr., 8,707.
For working paper users and nonusers:
2.       Enter transactions for the second half of December in the proper journals. If you are using the working papers, the cumulative amount of entries in the special journals for December 1–15 has been entered in these journals for you. Post immediately to the accounts receivable and accounts pay

3.       Post from the journals to the general ledger. Post the journals in the following order: general, sales, purchases, cash receipts, and cash payments.

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Equity and Cost Methods in Accounting Using QuickBooks™ to Record the Transactions

Assignment Choice #1: Equity and Cost Methods in Accounting Using QuickBooks™ to Record the Transactions
Follow these directions to set up QuickBooks™ for Module 3’s Critical Thinking Assignment:
1.            Load QuickBooks™ CD; enter the information on the disc sleeve when asked for the license and product number.
2.            Once QuickBooks™ is loaded, reboot your computer. Once rebooted, click icon entitled QuickBooks™, go through the agreement question(s), and then select “create a new company” and “express set-up”.
3.            Enter the company name, “Investor Corp.” with your address and phone number of your choice. The industry is financial services. The corporation will have a tax ID of 99-1234567, with no employees. Use your own address and CSU Global email, and then you can create a company and select start.
4.            Select home on the left side of the screen and the icons will appear. To start, go to the top panel and select account > general ledger.
5.            Create two cash accounts: Cash - Cost Method and Cash - Equity Method. For each cash account, classify as bank with the description written in saying “cash to buy Investee Corporation”.
6.            Go to the home screen by selecting the left side tab for home to go to the top panel.
7.            Select account > general ledger and deposit $1 million into the cash account as a debit to cash and a credit to capital stock.  For the cost method, assign a date of 1/1/2014 for the deposit and for the equity method, assign a date of 1/1/2016 for the deposit of the cash.
8.            Then return to the home menu. Select chart of accounts and then add new accounts for other assets: one called Investee Corp - Cost Method and the other Investee Corp - Equity Method (classify both as other assets).
9.            Again return to home. Select chart of accounts and then add new accounts, one called Dividend - Cost Method and the other called Dividend – Equity Method (classify both as according to the textbook definitions of each.)
10.          Lastly, return to home. Select chart of accounts and then add new accounts, one called Gain - Cost Method and the other Gain - Equity Method (both are income accounts).
Important to remember:
•             Do not forget to click on ‘save and close’ after you input and file.
•             Backup your company information many times as you work.
•             Always check to be sure your input dates are the end of the year, especially if you cannot find an input.
To start, go to the top panel and select account general ledger to complete the exercise below for both the equity method and the cost method of accounting for a long-term investment. Enter your journal entries from the top panel and select account, general ledger.
To submit for each method, select from the top ribbon reports > accounting and taxes > and then transaction detail by account. (Be sure the dates for the account are from 1/1/14 to 12/31/17). Export to Excel and then submit the details in two separate Excel spreadsheets for the two methods. Be sure to check your dates when both entering the transaction and exporting the information to Excel. Label the first Excel file: Mod 3-Option 1-Investee Corp.
Additionally, for the cost method use the earlier year. For the equity method, use the later year.
2014/2016
Jan        
1             
Investor Corporation purchased 8,000 shares (20%) of Investee Company’s outstanding stock at a cost of $150,000.
May       31           Investee Company declared and paid a cash dividend of $1.50 per share.
Dec        31           Investee Company announced that its net income for the year was $100,000.
2015/2017
Oct        
1             
Investee Company declared and paid a cash dividend of $1.00 per share.
Dec        21           Investee Company announced that its net income for the year was $80,000.

Dec.      
31          
Investor Corporation sold all of its shares of Investee Company for $178,000 cash.

Required:
1.            Cost method: Prepare journal entries for years 2014 and 2015 in QuickBooks™ on Investor Corporation’s books using the cost method, which assumes that investor does not have significant influence over Investee (for example, another corporation owns 70% of Investee Company’s stock).
2.            Equity method: Prepare in QuickBooks™ the journal entries for years 2016 to 2017 on Investor Corporation’s books using the equity method, which assumes that Investor has significant influence over Investee Company.
3.            Under the equity method Excel submission: Write a brief report between 200 and 300 words in length outlining your recommendations to senior management based on the information presented here.

Week 7 Accounting Questions Answered



Week 7 Accounting Questions


1) Which of the following is an example of the planning function of a budget?

a. A budget demands integrated input from different business units and functions.

b. Employees are motivated to achieve the goals set by the budget.

c. Budget figures are used to evaluate the performance of managers.

d. The budget outlines a specific course of action for the coming period.


2) Opportunity cost(s):

a. of a resource with excess capacity is zero

b. should be maximized by organizations

c. are recorded as an expense in the accounting records

d. are most important to financial accountants


3) Gnome Company is trying to decide whether to continue to manufacture a particular component or to buy the component from a supplier. Which of the following is relevant to this decision?

a. the potential uses of the facilities that are currently used to manufacture the component

b. the insurance on the manufacturing facility which will continue regardless of the decision

c. allocated corporate fixed costs which would have to be allocated to other products if the component is no longer manufactured

d. the cost of the equipment that is currently being used to manufacture the component


4) Which of following statements is true of short-term decision making?

a. Fixed costs and variable costs must be analyzed separately.

b. All costs behave in the same way.

c. Unit manufacturing costs are variable costs.

d. All costs involved in a decision are considered relevant.


5) A company is analyzing its month-end results by comparing it to both static and flexible budgets. During the previous month, the actual selling price was higher than the expected price as per the static budget. This difference results in a(n):

a. favorable flexible budget variance for sales revenues.

b. favorable sales volume variance for sales revenues.

c. unfavorable flexible budget variance for sales revenues.

d. unfavorable sales volume variance for sales revenues.


6) When replacing an old asset with a new one, the original purchase price of the old asset represents:

a. relevant cost.

b. differential costs.

c. opportunity cost.

d. sunk cost.


7) Polynesia Company manufactures sonars for fishing boats. Model 70 sells for $300. Polynesia produces and sells 5,500 of them per year. Cost data are as follows:

Variable manufacturing $100 per unit

Variable marketing $15 per unit

Fixed manufacturing $280,000 per year

Fixed marketing & admin $150,000 per year

The sales manager says he has an opportunity to pitch a special sale to a new Canadian fishing company that is outfitting new boats. He proposes a sale of 40 units at a special price of $150 per unit. He says it will not cannibalize the company's regular sales and is a one-time transaction. It will require the normal amount of variable costs, both marketing and manufacturing, but will not impact fixed costs in any way. The president of the company has some reservations, but finally agrees to make the deal if and only if it adds a minimum of $1,500 to operating income. Based on the president's criteria, what will Polynesia decide to do? (show the calculation to support this decision)


8) Mountain Sports Equipment Company projected sales of 78,000 units at a unit sale price of $12 for the year 2015. Actual sales of 2015 were 75,000 units at $14.00 per unit. Variable costs were budgeted at $3 per unit; actual amount was $4 per unit. Budgeted fixed costs totaled $375,000, while actual fixed costs amounted to $400,000. What is the sales volume variance for total revenue?


9) Western Outfitters projected sales of 75,000 units for the year 2015 at a unit sale price of $12.00. Actual sales in 2015 was 72,000 units, at $14.00 per unit. Variable costs were budgeted at $4.00 per unit; actual variable cost was $4.75 per unit. Budgeted fixed costs totaled $375,000 while actual fixed costs amounted to $400,000. What is the flexible budget variance for operating income?


10) Kapital Inc. has prepared the operating budget for the first quarter of 2015. They forecast sales of $50,000 in January, $60,000 in February, and $70,000 in March. Variable and fixed expenses are as follows:

Variable: Power cost (40% of Sales)

Miscellaneous expenses: (5% of Sales)

Fixed: Salary expense: $8,000 per month

Rent expense: $5,000 per month

Depreciation expense: $1,200 per month

Power cost/fixed portion: $800 per month

Miscellaneous expenses/fixed portion: $1,000 per month

Calculate total selling and administrative expenses for the month of January & February.


11) McPherson Company is facing a $6 increase in the variable cost of producing one of its products for the upcoming year. Because of this situation, the sales manager has made a proposal to increase the selling price of the product while increasing the advertising budget at the same time. The price increase will lower sales volume, but the other changes may help the company maintain its profit margins. McPherson has provided the following information regarding the current year results and the proposal made by the sales manager:

Current Year Proposal

Unit sales 27,000 18,000

Sales price per unit $48 $58

Variable cost per unit $30 $36

Fixed cost $76,000 $96,000

Relative to the current year, the sales manager's proposal will do what to Operating Income? (show calculations to support this)


12) Evans Company has estimated the following amounts for its next fiscal year:

Total fixed expenses $832,500

Sale price per unit 40

Variable expenses per unit 25

If the company spends an additional $30,000 on advertising, sales volume would increase by 2,500 units. What effect will this decision have on the operating income of Evans? (show calculations)


13) Moylan Company has provided the following information:

Sales $777,000

Variable expenses 504,000

Fixed expenses 212,000

What will be the change in variable expenses if the sales volume increases by 10%?


14) On the ________, cash dividends become a liability of a corporation.

a. declaration date

b. date of record

c. end of the fiscal year

d. payment date


15) ________ are equity securities in which the investor owns 20% or more, but less than 50%, of the investee's voting stock.

a. Held-to-maturity investments

b. Significant interest investments

c. Controlling interest investments

d. Available-for-sale investments


16) Held-to-maturity investments applies only to debt securities because:

a. these securities earn periodic interest.

b. equity securities do not mature on a specific date.

c. these are long-term investments.

d. equity securities are held for a very short period.


17) Equity securities in which the investor owns less than 20% ownership in the voting stock of the investee can be:

a. significant interest investments.

b. controlling interest investments.

c. held-to-maturity investments.

d. either trading investments or available-for-sale investments (security).


18) A bond is issued at premium :

a. when a bond's stated interest rate is equal to the market interest rate.

b. when a bond's stated interest rate is less than the effective interest rate.

c. when a bond's stated interest rate is less than the market interest rate.

d. when a bond's stated interest rate is higher than the market interest rate.


19) The date on which the principal amount is repaid to the bondholder is known as:

a. issuing date.

b. interest date.

c. maturity date.

d. installment date.


20) The following is summary of information presented on the financial statements of a company on December 31, 2015.

Account 2015 2014

Net Sales Revenue $600,000 $500,000

Cost of Goods Sold 450,000 400,000

Gross Profit $150,000 $100,000

Selling Expenses 50,000 50,000

Net income before income tax expense $100,000 $50,000

Income tax expense 35,000 18,000

Net Income $65,000 $32,000

What would a horizontal analysis report show with respect to net income?


21) The accounts receivable turnover ratio of a merchandiser is 9.8 times. Calculate the days' sales in receivables for the merchandiser. (Round to the nearest day.)


22) Zebra Inc. cost of goods sold for the year is $1,900,000 and average merchandise inventory for the year is $129,000. Calculate the inventory turnover ratio of the company.


23) A $30,000, three-month, 7% note payable was issued on December 1, 2015. What is the journal entry to record the accrued interest on December 31, 2015?


24) Revival Corporation's annual report is as follows.

March 31, 2014 March 31, 2015

Net Income $350,000 $423,500

Preferred Dividends 0 0

Total Stockholders' Equity $4,200,000 $5,082,000

Stockholders' Equity attributable to Preferred Stock 0 0

Number of Common Shares Outstanding 275,464 192,168

If the current market price is $15 on March 31, 2015, find the price/earnings ratio on March 31, 2015.


25) The Avatar Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for the year 2015:

• Sales Revenue, $515,000

• Accounts Receivable, beginning balance, $92,000

• Accounts Receivable, ending balance, $57,000

• Accounts Payable, beginning balance, $43,000

• Accounts Payable, ending balance, $27,500

In the operating activities section of the statement of cash flows, what amount will be shown for collections from customers?


26) Trek Company signed a 9%, 10-year note for $150,000. The company paid $1,900 as the installment for the first month. After the first payment, what is the updated principal balance?


27) Which of the following is one of the reasons why companies use standard costs?

a. to enhance customer loyalty

b. to set performance targets

c. to share best practices with other companies

d. to ensure the accuracy of the financial records


28) Which of the following does the efficiency variance measure?

a. the difference between the quantity used by the company and the quantity used by its competitors

b. the change in quantities used over time

c. the difference between actual and standard quantity used

d. how quickly materials are processed into finished goods


29) The production manager of a company was experiencing a high defect rate on the assembly line, which was slowing production and causing wastage of valuable materials. He decided to recruit some highly skilled production workers from another company to bring down the defect rate, but was worried that the higher wages of these workers might negatively affect operating income. This situation would have produced a(n):

a. unfavorable direct materials cost variance.

b. unfavorable direct labor cost variance.

c. unfavorable direct labor efficiency variance.

d. unfavorable direct materials efficiency variance.


30) Which of the following is used to charge the cost of direct labor to the production?

a. Debit for standard quantity for actual production times standard cost per hour

b. Credit for standard quantity usage for actual production times actual cost per hour

c. Debit for actual quantity times standard cost per hour

d. Credit for standard quantity for actual production times standard cost per hour


31) Brad, one of the managers of a multi-national company, is responsible to generate revenues and control costs in order to increase the operating income of his division. However, he is not concerned with investment-related decisions. Brad is most likely to be the manager of a(n):

a. cost center.

b. investment center.

c. profit center.

d. revenue center.


32) If fixed costs are $1,000, variable cost per unit is $2.00 and budgeted units of output is 1,000 unites, what is the budgeted production costs?

a. $3,000

b. $4,000

c. $0

d. $2,000


33) Wood Designs Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $4.00 per square foot from the supplier. Delivery costs are $0.25 per board foot. Carpenters' wages are $25.00 per hour. Payroll costs are $3.60 per hour and benefits are $5.00 per hour. How much is the direct labor cost standard (per hour)?


34) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows:

Direct materials: 3 pounds per unit; $4 per pound

Direct labor: 4 hours per unit; $15 per hour

During the first quarter, Emerald produced 5,000 units of this product. Actual direct materials and direct labor costs were $65,000 and $325,000, respectively.

For the purposes of preparing the flexible budget, calculate the total standard direct materials cost at a production volume of 5,000 units.


35) Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows:

Direct materials: 1 pound per unit; $12 per pound

Direct labor: 4 hours per unit; $15 per hour

Emerald produced 5,000 units during the quarter. At the end of the quarter, an examination of the materials records showed that the company used 7,000 pounds of materials and actual total material costs were $98,000.

Calculate the direct materials cost variance.


36) Accurate Tax Returns budgets 2 direct labor hours for every tax return that it prepares, at a standard cost of $32 an hour. During the most recent year, 500 returns were completed with the labor cost totaling $18,000. The actual labor cost was $36 per hour during that period. The actual number of labor hours was 1,000. What was the direct labor cost variance?


37) Elite Brands Company uses standard costs for their manufacturing division. Standards specify 0.1 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data:

Production volume 6,000 units

Estimated variable overhead costs $13,500

Estimated direct labor hours 600 hours

At the end of the year, actual data were as follows:

Production volume 4,000 units

Actual variable overhead costs $15,000

Actual direct labor hours 480 hours

How much is the standard cost per direct labor hour for variable overhead?


38) From the following particulars of Rose Mary Company, calculate the total direct materials variance.



39) Recreation Equipment Company has several divisions that are investment centers. Data for the Boat Division and the Trailer Division are shown here:

Boat Division Trailer Division

Operating income $90,000 $36,000

Total assets at Jan 1 $670,000 $230,000

Total assets at Dec 31 $710,000 $220,000

With regard to the efficient use of assets, which division has a higher ROI (show your calculations)







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