The answer would be a. Have the ability to exercise significant influence over the operating and financial policies of the investee
The question is reproduced in the table below for clarity
Oven Contribution
Hours Required Margin Per Unit
Muffins 0.2 $4
Coffee Cakes 0.3 $5
Answer:
Total contribution margin = $ 60,000.00
Explanation:
<em>When a business is faced with a problem of shortage of a resource which can be used to produced more than one product type, to maximize the use of the resource , the business should allocate it for production purpose in such a way that it maximizes the contribution per unit of the scare resource.</em>
Therefore Crane Company should alocate the oven hours to maximise the contribution per unit of oven hour. This is done as follows:
Step 1
<em>Calculate he contribution per oven hour and rank the product</em>
cont/hr ranking
Muffin $4/0.2 hour = 20 <em> 1st</em>
Coffee cakes $5/0.3 hour= 16.67 2nd
<em>Because Muffin generates the highest contribution per hour of Oven, Crane should allocate all the resource to it</em>
Step 2
<em>Calculate the Total contribution from the production of Muffin</em>
Total contribution margin = 20 per her × 3000
= $ 60,000.00
Sensitivity analysis. Where one variable is being tweaked a little to see the NPV, that is always sensitivity analysis.
Answer:
The correct answer is D.
Explanation:
Giving the following information:
The per-unit standards for direct labor are 2 direct labor hours at $15 per hour. If in producing 1800 units, the actual direct labor cost was $48000 for 3000 direct labor hours worked.
We need to calculate the total direct labor variance, using two formulas:
Direct labor efficiency variance= (SQ - AQ)*standard rate
Direct labor efficiency variance= (1,800*2 - 3,000)*15= $9,000 favorable
Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity
Direct labor rate variance= (15 - 48,000/3,000)*3,000= $3,000 unfavorable
Total direct labor variance= 9,000 - 3,000= $6,000 favorable
