# Quiz 5 Key

1. Spragg Corporation is developing standards for its products. One product requires an input that is purchased for \$62.00 per kilogram from the supplier. By paying cash, the company gets a discount of 6% off this purchase price. Shipping costs from the supplier's warehouse amount to \$4.45 per kilogram. Receiving costs are \$0.50 per kilogram. Each unit of output requires 0.48 kilogram of this input. The allowance for waste and spoilage is 0.04 kilogram of this input for each unit of output. The allowance for rejects is 0.13 kilogram of this input for each unit of output. Required: a. Determine the standard price per kilogram of this input. Show your work! b. Determine the standard kilograms of this input per unit of output. Show your work!

4 x 400) x (\$6.10 . f.1. Variable overhead rate variance = AH(AR . e. Lido Company's standard and actual costs per unit for the most recent period.5 x 400) = \$136 F . Direct labor efficiency variance.40) = \$168 F f. Materials quantity variance = SP(AQ .SQ) = \$1. are given below: Required: From the foregoing information.40(1.\$3.4 x 400) x (\$3.50) = \$84 U b.SH) = \$3. Materials price variance = AQ(AP . during which 400 units were actually produced.50 .2.SR) = (1.50(2.\$1.00) = \$280 U d.5 x 400) = \$240 F e.\$6.4 x 400 . Show whether the variance is favorable (F) or unfavorable (U): a.0 x 400) = \$60 U c. Direct labor rate variance = AH(AR . a.1 x 400 . Materials price variance. Direct labor rate variance. Direct labor efficiency variance = SR(AH .1.1 x 400) x (\$1. b.00(1.SR) = (1. compute the following variances.SP) = (2. c. Variable overhead efficiency variance. Variable overhead efficiency variance = SR(AH . Materials quantity variance.60 .SH) = \$6.4 x 400 . Variable overhead rate variance.2. d.

c.0 days . inspection time was 0. What percentage of the production time is spent in non-value-added activities? d.39 Throughput time c. Delivery cycle time = Wait time + Throughput time = 11. b. a.0 days = 7.8 days + 7.6 days + 3.MCE% = 100% . Compute the manufacturing cycle efficiency (MCE).8 days + 0.6 day.2 days = 0. During the most recent month at Hybarger Corporation.8 days 7. Required: a. Throughput time = Process time + Inspection time + Move time + Queue time = 2.0 days.8 days. Compute the throughput time. queue time was 3. MCE = Value-added time (Process time) = 2.39% = 61% d. wait time was 11.8 day. Compute the delivery cycle time.8 days + 0. process time was 2.2 days = 19.8 days.2 days b. Percentage of time spent on non-value-added activities = 100% .3. and move time was 0.

What was the company's residual income last year? . Compute the company's margin. turnover. and return on investment for last year. b. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.4. The Board of Directors of Beaker Company has set a minimum required return of 20%. Required: a. Financial data for Beaker Company for last year appear below: The company paid dividends of \$2.100 last year.

a.000) Margin = Net operating income Turnover = Sales Sales = \$62.8 = 27% 5.000.760 .18% x \$8.453.000 + \$240.000 = 15% \$230.000 ROI = Margin x Turnover = 15% x 1. Average operating assets = (\$220.453.2% b. The following data are for the latest year of operations: Required: a. Residual income = Net operating income . Operating assets do not include investments in other companies or in undeveloped land.Minimum required rate of return x Average operating assets = \$1. What is the division's residual income? a. Ferro Wares is a division of a major corporation.000 = 1.000 = \$13. ROI = Net operating income Average operating assets = \$1.100 2 = \$230.760 .760 \$8.8 Average operating assets = \$414.000 \$414.000 = 18.000. What is the division's return on investment (ROI)? b.

Chapter 012 Garrison .Chapter 013 Learning Objective: 1 Learning Objective: 2 Learning Objective: 3 Learning Objective: 4 Learning Objective: 5 Level: Easy Level: Medium # of Questions 6 6 6 3 2 1 2 3 3 1 1 3 3 .Chapter 011 Garrison .6. What is the differential cost between the two alternatives? Quiz 5 Summary Category AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Garrison . Costs associated with the alternatives are listed below: Required: a. Which costs are relevant and which are not relevant in the choice between these two alternatives? b. Rackett Corporation is considering two alternatives that are code-named M and N.