Hometown Resources,Inc

question 16

Essay

Hometown Resources,Inc.has a 9% rate of return on total assets and the industry average is 12%.How was the 9% rate of return on total assets computed? Comment on this information.

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Definitions:

Materials Quantity Variance

The contrast between the quantity of materials actually used and the quantity that was projected, with this difference being multiplied by the standard price per unit.

Materials Price Variance

The variance between the real expense of materials utilized in production and the predetermined standard cost of those materials.

Raw Materials Inventory

The stock of basic materials and components that are to be used in the production or manufacturing of goods.

Labor Rate Variance

The difference between the actual cost of labor and the expected (or budgeted) cost, often analyzed in cost accounting.