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DanielleCPA, Certified Public Accountant (CPA)
Category: Finance
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Experience:  CPA experienced in tax and financial planning
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# 17. Calculate the price variance based on the following data,

### Customer Question

17. Calculate the price variance based on the following data, be sure identify if this variance as favorable or unfavorable:
Actual Price \$6.00

Standard Prince \$5.90

Actual Quantity 1,000 units

Standard Quantity 900 units

18. Explain the difference between absorption and variable costing income statements and discuss which method has a greater chance of manipulation by management.

10. Which of the following expenses incurred by the sporting goods department of a department store is a direct expense? (Points: 5)
Depreciation expense--office equipment
Insurance on inventory of sporting goods
Uncollectible accounts expense
Office salaries

11. Income from operations of the Commercial Aviation Division is \$2,225,000. If income from operations before service department charges is \$3,250,000: (Points: 5)
operating expenses are \$1,025,000
total service department charges are \$1,025,000
noncontrollable charges are \$1,025,000
direct manufacturing charges are \$1,025,000

12. To calculate income from operations, total service department charges are: (Points: 5)
added to income from operations before service department charges
subtracted from operating expenses
subtracted from income from operations before service department charges
subtracted from gross profit margin

13. Income from operations for Division B is \$150,000, total service department charges are \$400,000 and operating expenses are \$2,266,000. What are the revenues for Division B? (Points: 5)
\$550,000
\$3,216,000
\$2,816,000
\$2,666,000

14. The profit margin for Division E is 28% and the investment turnover is 2.8. What is the rate of return on investment for Division E? (Points: 5)
20%
28%
14%
78.4%

15. Stevenson Corporation had \$275,000 in invested assets, sales of \$330,000, income from operations amounting to \$49,500 and a desired minimum rate of return of 7.5%. The rate of return on investment for Stevenson is: (Points: 5)
8%
10%
18%
7.5%

16. When a budget is set too high (Points: 5)
production always decreases
everyone meets the budget
production always increases
people may stop trying since they know it can not be achieved
Submitted: 4 years ago.
Category: Finance
Expert:  DanielleCPA replied 4 years ago.

17. (Actual price-standard price) x actual quanity

(6-5.9) * 1000 = 100 Unfavorable

18. Variable costing income statements show cost of goods sold based only on the variable costs. Variable costing income statements show the margin based on variable costs (cost of goods sold and administrative costs) and then deduct fixed costs. Fixed costs are not built into the cost of the product. Under absorption costing, fixed costs are included in the cost of the profit. Gross profit is shown net of variable costs and fixed costs allocated to the product, then variable and fixed administrative costs are deducted.Absorption costing has the greater chance of misuse by management because management can allocate fixed costs to the cost of the product that really should not be built into the product.
10. Insurance on inventory of sporting goods
11.total service department charges are \$1,025,000
12. subtracted from income from operations before service department charges
13.\$2,816,000
14. 78.4%
15. 18%
16. people may stop trying since they know it can not be achieved

DanielleCPA, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 748
Experience: CPA experienced in tax and financial planning

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