Question

Choose the correct answer

1. Variable manufacturing overhead at Company ABC is applied to products on the basis of standard direct labor hours. If the labor efficiency variance is unfavorable, the variable overhead efficiency variance will be

A. favorable

B. unfavorable

C. either favorable or unfavorable

D. zero

2. ABC Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost?

A. store manager salaries

B. store building depreciation expense

C. the cost of corporate advertising aired during the Super Bowl

D. all of the above

3. The performance measures used on a balanced scorecard include the following:

A. Industry measures such as total sales in the industry

B. Economic measures such as the inflation rate

C. Customer measures such as number of customer complaints

D. All of the above.

4. What is the return on investment (ROI) for ABC Company, based on its 2017 data below:

Average operating assets	$2,016,000
Total liabilities	$151,200
Sales	$1,008,000
Contribution margin	$604,800
Net operating income	$252,000

A.    50.0%

B.    30.0%

C.    25.0%

D.    12.5%

Answer 1

1)correct option is "B" -unfavorable

Since the actual hours worked is more than than the standard hours ,the variable overhead efficiency variance will also be unfavorable as it is applied on the basis of Direct labor hours

2)correct option is "C" -the cost of corporate advertising aired during the Super Bowl

since this cost is incurred at corporate level (not at store or segment level ) ,it is a common fixed cost

3)correct option is "C" -Customer measures such as number of customer complaints

4)correct option is "D" -12.5%

ROI =net operating income /total asset

    = 252000/2016000

   = 12.5%