Le Sud Retailers Has a Current Return on Investment of 10

question 85

Multiple Choice

Le Sud Retailers has a current return on investment of 10% and the company has established an 8% minimum rate of return for the division. The division manager has two investment projects available for which the following estimates have been made:
Project A - Annual controllable margin = $24000 operating assets = $400000
Project B - Annual controllable margin = $60000 operating assets = $550000
Which project should be funded?

• A) Both projects
• B) Project A
• C) Project B
• D) Neither project

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Definitions:

Direct Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate, indicating the efficiency of labor used in production.

Direct Labor Costs

Direct labor costs are the wages and benefits paid to employees who are directly involved in the production of goods or services, constituting part of the total manufacturing costs.

Total Direct Labor Cost Variance

The difference between the actual direct labor costs incurred and the standard or expected direct labor costs.

Direct Labor Costs

Direct labor costs are the total amounts paid to employees directly involved in production, such as wages for hours worked on manufacturing goods.