Answer:
a. 4.5%
b. $5.643
Explanation:
a. Current Selling price is $60 per share, earnings per share is $5.40, dividend in year end is $2.70. Required rate of return is 9%.
Calculate the growth rate as follows:
Growth rate= 
=9%- $2 70/$60
= 9% - 0.045
= 9% - 4.5%
=4.5%
b. If Spencer reinvests earnings in projects with average returns equal to the stock's expected rate of return.
Calculate the next year's EPS as follows:
Next year EPS = Current EPS X (I + Growth)
=$5.40 x (1 + 4.5%)
=$5.40 x (1 + 0.045)
=$5.40 x (1.045)
$5.643
Therefore, the next year earnings per share (EPS) will be
$5.643
<u>Explanation:</u>
1. Calculation of labor spending variance for the month of march
Labor spending variance = (Actual rate x actual hours)- (Standard rate x Standard hours)
=(13 x 63000) - (12 x (26000 x 3))
=-1,38,600
Labor spending variance for the month of March is $138600
2.Calculation of variable manufacturing overhead planning cost
Variable manufacturing overhead planning cost= (Planning budget units x required hours x cost per hour)
=(21000 x 3 x7)
=441,000
Variable manufacturing overhead planning cost is $441,000
3. Calculation of Variable manufacturing overhead cost
Variable manufacturing overhead cost= (Actual units x required hours x cost per hour)
=(26600 x 3 x7)
=$558,600
Variable manufacturing overhead cost is $558,600
4. Calculation of Variable overhead rate variance
Variable overhead rate variance= Actual hours ( actual rate - standard rate)
=63000((510930/63000)-8)
=63000(8.11-8)
=63000(0.11)
=6930
Variable overhead rate variance is =6930
