| Joe’s Tuxedos has
monthly fixed costs of $12,000. The variable costs of sales are 60%. What is
the break-even monthly sales revenue? |
|
| Question 1 options: |
|
| $20,000 |
|
|
| $30,000 |
|
|
| $19,200 |
|
|
| $7,200 |
|
| Delta Manufacturing has sales of
$2,000,000 with direct materials cost of $400,000, direct labor of $280,000,
variable overhead of $120,000, |
| and fixed costs of $300,000. What is
Delta’s contribution margin percentage? |
|
| Question 2 options: |
|
| 40% |
|
|
| 55% |
|
|
| 60% |
|
|
| 45% |
|
| If a company has a 45% contribution
margin ratio and has fixed costs of $250,000, how much sales does it need to
earn a gross profit of $200,000? |
|
| Question 3 options: |
|
| $1,000,000 |
|
|
| $555,556 |
|
|
| $818,182 |
|
|
| $652,500 |
|
| Leisure Products management wants to
ensure that each product makes a profit. The company produced a hammock that
sold 3,500 units at $80 per unit. |
| The variable cost of production was $36
per unit. The fixed costs were $110,000. What was the margin of safety? |
|
| Question 4 options: |
|
| $54,000 |
|
|
| $80,000 |
|
|
| $126,000 |
|
|
| $20,000 |
|
| Sports Specialty Inc. produces a bicycle
that it normally sells wholesale for $250 per bike. |
| The variable costs of production are
$160 and the fixed cost for this product line is $154,000 per month. The
company has been selling this product at a rate of 2,000 units per
month. |
| The company has received an order for
1,000 bikes at a price of $182 per bike. The order is to ship to a market
where the company has no business, so it is believed it will not adversely
affect existing business. |
| The company has the capacity to produce
the special order. How much will operating profit increase if Sports
Specialty accepts this order? |
|
| Question 5 options: |
|
| increase of $26,000 |
|
|
| increase of $48,000 |
|
|
| decrease of $55,000 |
|
|
| increase of $22,000 |
|
|
| Premier Manufacturing makes and
distributes a wall clock that is popular with schools and other institutions.
Normal monthly sales are 2,500 clocks at an average sale price of $40 per
clock. |
| Production of each clock takes 15
minutes of direct labor and has material costs of $14. The direct labor rate
is $22 per hour, and overhead is applied at a rate of $40 per direct labor
hour. |
| The overhead spending is 60% fixed and
40% variable costs. Premier has been approached by a supplier offering to
supply all of the clocks at a finished cost of $25 per clock. As |
| sume that all fixed overhead would
remain, but the variable overhead would be eliminated. What would be the
change in monthly operating income if Premier buys the clocks instead of
making them? |
|
| Question 6 options: |
|
| increase of $3,750 |
|
|
| decrease of $3,750 |
|
|
| increase of $11,250 |
|
|
| decrease of $11,250 |
|
|
| Roscoe Enterprises has sales for a
three-month period as follows: May, $240,000; June, $280,000; July, $275,000.
All sales are on account, and history has shown that accounts receivable are
typically |
| collected 10% in the month of the sale,
60% in the month after the sale, and 30% two months after the sale. What are
Roscoe’s expected cash collections in the month of July? |
|
|
| Question 7 options: |
|
| $267,500 |
|
|
| $172,000 |
|
|
| $275,000 |
|
|
| $280,000 |
|
| Mega Manufacturing has a budget to sell
100,000 units of a certain product at a selling price of $35 per unit.
Variable costs for materials, labor, and overhead are $18 per unit. |
| Fixed cost is $800,000. Actual sales
were 110,000 units, and management would like to see actual manufacturing
performance compared to a budget adjusted for volume (flexible budget). |
| What would be the adjusted budgeted
operating profit? |
|
| Question 8 options: |
|
| $1,870,000 |
|
|
| $900,000 |
|
|
| $1,070,000 |
|
|
| $990,000 |
|
|
| A company president wants the chief
financial officer to tell him how many sales are required to make a
$1,000,000 operating profit. |
| Variable production costs are 70% of
sales, and fixed costs are $2,750,000. What are the required sales, rounded
to the closest dollar? |
|
| Question 9 options: |
|
| $8,750,000 |
|
|
| $5,357,143 |
|
|
| $9,166,667 |
|
|
| $12,500,000 |
|
|
| Top Dog Company has a budget with sales
of 5,000 units and $3,200,000. Variable costs are budgeted at $1,750,000, and
fixed overhead is budgeted at $900,000. |
| What is the budgeted manufacturing cost
per unit? |
|
| Question 10 options: |
|
| $350 |
|
|
| $530 |
|
|
| $640 |
|
|
| $460 |
|
| Problem 1 (20 points) |
|
| X-Ray Manufacturing has the following
revenues and costs: |
|
| Sales |
| Fixed overhead |
| Direct labor |
| Direct materials |
| Selling expenses |
| Administrative expenses |
| Variable overhead |
| Interest expense |
| Income tax |
|
| Prepare a contribution margin income
statement with both dollars and percentages of sales displayed. |
|
| Presented below are selected budget data
items for Globe Corporation for a three-month period: |
|
|
| Sales |
| Direct materials |
| Direct labor |
| Variable overhead |
| Fixed overhead |
| Selling and admin. costs |
| Fixed loan payments |
|
| Sales were $770,000 in August
and $790,000 in September. Material usage was $115,000 in August and $118,000
in September. |
| All sales are on account, and accounts
receivable is historically collected 15% in the month of sale, 65% in the
month following sales, and the remainder two months after the sale. |
| Materials are paid for 40% in the month used
and 60% the following month. All other expenses are paid in the month
incurred. The cash balance was $35,000 at the beginning of October, |
| and management wants to determine if the
company will have enough cash to pay a year-end |
|
| Olympic Products Inc. manufactures and
distributes barbecue grills. The company normally sells 1,000 of these grills
each month for a price of $140 each. |
| The material cost for a grill is $44 and
the direct labor is $22. The variable overhead cost is $13 per grill, and the
fixed overhead cost is $30,000 per month. |
| A
contract manufacturer has approached the company and offered to supply the
grills ready to sell for $85 each. The company management believes that if it
accepts this offer, |
| Olympic Products will be able to lease
unused factory space for $10,000 per month. |
|
|
| Perform a make-versus-buy
analysis. |
|
|
