Question

Requirement :1 Irving Corporation makes a product with the following standards for direct labor and variable...

Requirement :1

Irving Corporation makes a product with the following standards for direct labor and variable overhead:

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit
Direct labor 0.20 hours $ 20.00 per hour $ 4.00
Variable overhead 0.20 hours $ 5.60 per hour $ 1.12

In November the company's budgeted production was 5,900 units, but the actual production was 5,700 units. The company used 1,640 direct labor-hours to produce this output. The actual variable overhead cost was $8,528. The company applies variable overhead on the basis of direct labor-hours.

The variable overhead rate variance for November is:

Requirement:2

Irving Company has a contribution margin of 15%. Sales are $633,000, net operating income is $94,950, and average operating assets are $143,000. What is the company's return on investment (ROI)?​

Homework Answers

Answer #1
  • All working forms part of the answer
  • Requirement 1

Variable Overhead Rate Variance

(

Standard Rate

-

Actual Rate = (8528/1640)

)

x

Actual Labor Hours

(

$                        5.60

-

$                       5.20

)

x

1640

656

Variance

$                  656.00

Favourable-F

  • Requirement 2

ROI = (Net Operating Income / Average Operating Assets) x 100

= ($ 94950 / $ 143000) x 100

= 66.40%

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