Business Finance Homework Help

Q.1 Arshan Industries is a division of a major corporation. Last year the division had total sales of $23,380,000, net operating income of $2,828,980, and average operating assets of $7,000,000. The company’s minimum required rate of return is 12%.

Required:
a. What is the division’s margin?
b. What is the division’s turnover?
c. What is the division’s return on investment (ROI)? (1.5 Marks)

Answer

Q.2 The following direct labor standards have been established for product K-19:

	Standard direct labor-hours……..	1.2	hours per unit of K-19
	Standard direct labor wage rate.	$11.50	per hour

The following data pertain to the most recent month’s operations during which 3,860 units of product K-19 were made:

	Actual direct labor-hours worked	4,600
	Actual direct labor wages paid…..	$53,360

Required:

a. What was the labor rate variance for the month?

b. What was the labor efficiency variance for the month? (1 Marks)

Answer:

Q.3 The following standards have been established for a raw material used in the production of product O99:

	Standard quantity of the material per unit of output…..	2.6	pounds
	Standard price of the material…………………………………..	$14.50	per pound

The following data pertain to a recent month’s operations:

	Actual material purchased……………….	7,600	Pounds
	Actual cost of material purchased…….	$110,960
	Actual material used in production…..	7,300	Pounds
	Actual output…………………………………	2,800	units of product O99

Required:

a. What is the materials price variance for the month?

b. What is the materials quantity variance for the month? (1 Marks)

Answer:

Q.4 Abdulrahman Co. prepared the following product-line income data:

The following additional information is available:
* The factory rent of $1,500 assigned to Product C is avoidable if the product were dropped.
* The company’s total depreciation would not be affected by dropping C.
* Eliminating Product C will reduce the monthly utility bill from $1,500 to $800.
* All supervisors’ salaries are avoidable.
* If Product C is discontinued, the maintenance department will be able to reduce monthly expenses from $3,000 to $2,000.
* Elimination of Product C will make it possible to cut two persons from the administrative staff; their combined salaries total $3,000.

Required:

Prepare an analysis showing whether Product C should be eliminated. ( 1.5 Marks )

Answer ……..