Answer:
Cost Nature Cost driver
Rent Fixed Area per ft
Utilities Variable Units used per activity
Car Payment Variable Km. run
Cell phone bill Variable Charges peer min of usage
Gasoline Variable Usage per in ltr.
Cable Bill Fixed Number of connected devices
Groceries Variable Usage per day
Dining Out Variable Number of days dined out
That would be a "media plan"
Direct material cost variance = (Standard price - Actual Price) * Actual Quantity
= ($50 - $51) * 47,000
= $47,000 adverse
Answer:
Should Marston Manufacturing Company accept or reject the project?
Marston C Company should reject the project because its expected return is lower than Division H's cost of capital.
Since the divisions' risk is so different, and probably their projects are also very different, the company should use different costs of capital to accept of reject the projects based on each division's cost of capital.
Imagine another situation where Division L is evaluating a project that yields 10%. If they used the company's WACC, then they should reject the project, but if they used the division's cost of capital, then they should accept the project (in this case I would recommend accepting it).
Explanation:
Division H's risk = 14%
Division L's risk = 8%
WACC = 11%
