Homegoods ROI; Brown Co material & labor Variance
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The 2007 income statement for the east division of the Homegoods Company is as follows:
Sales $2,000,000
Operating expenses 1,250,000
Net operating income 750,000
Interest expense 150,000
Earnings before taxes 600,000
Tax expense (40%) 240,000
Net Income $360,000
If this division's invested capital is $3,000,000 then its return on investment is:
20%.
15%.
17%.
12%.
Brown Company produces fine leather footballs. The standard cost for each football is:
Direct material 2 feet of leather at $4.00/foot $8.00
Direct labor 1.5 hours at $12.00/hour $18.00
During February, 1,200 footballs were produced. 2,600 feet of leather were purchased at $4.25 per foot. Of this, 2,300 feet were used in production. Direct labor cost incurred was $20,930 for 1,820 hours.
Reference: Ref 11-2
What is the direct labor efficiency variance?
$20 unfavorable
$240 unfavorable
$360 unfavorable
$360 favorable
Brown Company produces fine leather footballs. The standard cost for each football is:
Direct material 2 feet of leather at $4.00/foot $8.00
Direct labor 1.5 hours at $12.00/hour $18.00
During February, 1,200 footballs were produced. 2,600 feet of leather were purchased at $4.25 per foot. Of this, 2,300 feet were used in production. Direct labor cost incurred was $20,930 for 1,820 hours.
Reference: Ref 11-2
What is the direct labor rate variance?
$900 favorable
$900 unfavorable
$910 favorable
$910 unfavorable
Brown Company produces fine leather footballs. The standard cost for each football is:
Direct material 2 feet of leather at $4.00/foot $8.00
Direct labor 1.5 hours at $12.00/hour $18.00
During February, 1,200 footballs were produced. 2,600 feet of leather were purchased at $4.25 per foot. Of this, 2,300 feet were used in production. Direct labor cost incurred was $20,930 for 1,820 hours.
Reference: Ref 11-2
What is the direct material usage variance?
$100 unfavorable
$400 favorable
$800 favorable
$800 unfavorable
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Solution Summary
The solution computes Homegoods return on investment; Brown Co material and labor variances.
Solution Preview
Homegoods Company
Return on Investment = (Net Income / Invested Capital) * 100
Return on Investment = (360000/3000000) * 100 = 12%
Brown Company
Direct Labor Rate Variance(DLRV)
DLRV = (Standard Rate - Actual Rate) * Actual direct labor ...
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