1. Smithy Company produces hockey helmets. The standard cost for each helmet is as follows:
Direct material Direct labor Overhead
5.0 lbs at $4.00/lb. 2.0 hrs @ $16.00/hr.
$20.00 $32.00 $10.00
During November, 2,000 helmets were produced. 10,600 lbs. of material were purchased and used during November, at a total cost of $44,520. Labor worked 3,870 hours at a total cost of $61,146. Actual overhead was $21,900. The overhead cost of $10.00 per helmet was determined using an estimated monthly fixed overhead of $13,200 and a variable overhead of $4.00 per helmet.
What is the labor rate variance? $_______________
What is the labor efficiency variance? $_______________ What is the materials price variance? $_______________ What is the materials quantity variance? $_______________
2. Edy's, Inc. wants to purchase of a new ice cream truck with a cost of $51,000. Edy's has a cost of capital of 7.4% and a required rate of return of 10.4%. Its income tax rate is 32%. The acquisition is proposed for January 1, 2011. Edy's expects it can sell the truck for $7,000 at end of its useful life of 4 years. Edy's estimates the following incremental amounts to be generated by the truck:
Year 1 Net income $4,200 Operating cash flows 15,200
Year 2 $5,600 16,600
Year 3 $6,100 17,100
Year 4 $5,800 16,800
How much is accounting rate of return?
A. 14.48%
B. 56.64%
C. 10.64%
D. 18.71%
E. Some other answer
3. Checks Experts sells checks and deposits slips to businesses. The company’s history shows 40% of the sales are collected in the month of the sale, 30% the following month, 28% two months later and 2% is never collected. The company expects sales to be $500,000 (Jan), $450,000 (Feb), $425,000 (Mar), and $400,000 (Apr). How much are the budgeted cash receipts for March?
$______________________
How much are the budgeted cash receipts for the first quarter? $_________________