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Question 1
A company produces units that should take 1.5 hours to make. The standard rate of pay is $15 per hour. Idle time is expected to be 10% of hours paid.They actually produce 20,000 units. They pay $520,000 for 38,000 hours, of which 3,000 hours are idle.
What is the labour efficiency variance (to the nearest $)?
a. $75,000A
b. $83,333A – Answer
c. $80,000A
d. $120,000AQuestion 2
The following ratios have been calculated for a company:Gross profit margin 28%
Operating profit margin 15%
Gearing (debt/equity) 30%
Asset turnover 60%What is the return on capital employed for the company?
a. 9% – Answer
b. 8.4%
c. 4.5%
d. 16.8%Could someone help please. I just can’t seem to get my head around it.
Thanks
Kin
kino92:
Twinkling Stars answer to the first question is correct.
I suggest that you watch the free lecture on idle time variances!For question 2:
Return on capital employed = operating profit margin x asset turnover = 15% x 60% = 9%
For this you should watch the free lecture on financial performance measurement!Twinkling star:
It does not matter how you get the answer, and you certainly do not elaborate in writing.
In Section A the answer is marked by computer – it is either right or wrong. Nobody looks at your workings.@johnmoffat said:
kino92:Twinkling Stars answer to the first question is correct.
I suggest that you watch the free lecture on idle time variances!For question 2:
Return on capital employed = operating profit margin x asset turnover = 15% x 60% = 9%
For this you should watch the free lecture on financial performance measurement!Thanks John!
and thank you Twinkling Star
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