1) Five Seasons is a merchandiser of packed foods. The company provides the foll
ID: 2497462 • Letter: 1
Question
1) Five Seasons is a merchandiser of packed foods. The company provides the following information for the year 2015: Sales Revenue $140,000 Cost of Goods Sold $63,000 Operating Expenses $67,500 Net Income $9,500 Number of Units Sold 27,000 How much was the unit cost per unit of product sold?
A) $3.14
B) $5.18
C) $2.33
D) $0.82
2. True or False: Purely Pizza Company sells pizzas in two different sizes—medium and large. The number of medium pizzas sold is twice the number of large pizzas sold. The contribution margin of a medium pizza is $10 and the contribution margin of a large pizza is $16. The weighted average contribution margin is $15.
3.) Jame Company sells glass vases at a wholesale price of $3 per unit. The variable cost of manufacture is $1.75 per unit. The fixed costs are $7,500 per month. Jame sold 5,500 units during this month. Calculate Jame's operating income (loss) for this month.
A) $9,000
B) $625
C) ($625)
D) ($7,500)
4.) Jezebel Company incurred fixed costs of $300,000. Total costs, both fixed and variable, are $450,000 when 50,000 units are produced. It sold 35,000 units during the year. Calculate the variable cost per unit.
A) $9
B) $12
C) $6
D) $3
5. Healthier Cook Company manufactures two products: toaster ovens and bread machines. The following data are available:
Toaster Ovens
Bread Machines
Sale price
$80
$150
Variable costs
$40
$70
Healthier Cook can manufacture six toaster ovens per machine hour and four bread machines per machine hour. Healthier Cook's production capacity is 1,800 machine hours per month. What is the contribution margin per machine hour for toaster ovens?
A) $235
B) $320
C) $7
D) $20
6. Clay Corporation manufactures two styles of lamps—a Bedford Lamp and a Lowell Lamp. The following per unit data are available:
Bedford Lamp
Lowell Lamp
Sale price
$25
$35
Variable costs
$17
$23
Machine hours required for 1 lamp
2
4
Total fixed costs are $30,000. Marketing data indicate that the company can sell up to 8,000 units of the Bedford lamp and up to 4,000 units of the Lowell lamp. Machine hour capacity is 25,000 hours per year. What product mix will deliver the optimum operating income?
A) 4,500 Bedford lamps, 4,000 Lowell lamps
B) 12,500 Bedford lamps, zero Lowell lamps
C) 8,000 Bedford lamps, 2,250 Lowell lamps
D) 7,500 Bedford lamps, 3,000 Lowell lamps
7. A manufacturer has budgeted sales for the first quarter of the next year to be 30,000 units. The inventory in hand at the beginning of quarter is 5,000 units. The desired ending inventory is 10,000 units. Calculate the budgeted production for the quarter.
A) 10,000 units
B) 35,000 units
C) 25,000 units
D) 40,000 units
8. Delleate Inc. has prepared the following purchases budget:
Month
Budgeted Purchases
June
$67,000
July
72,500
August
76,300
September
73,700
October
69,200
All purchases are paid for as follows: 10% in the month of purchase, 50% in the following month, and 40% two months after purchase. Calculate balance of Accounts payable at the end of October.
A) $77,680
B) $91,760
C) $69,330
D) $74,290
9.) Gladeer Company is evaluating an investment that will cost $520,000 and will yield cash flows of $300,000 in the first year, $200,000 in the second year, and $100,000 in the third and final year. Use the tables below and determine the internal rate of return.
Present value of $1:
8%
9%
10%
11%
1
0.926
0.917
0.909
0.901
2
0.857
0.842
0.826
0.812
3
0.794
0.772
0.751
0.731
4
0.735
0.708
0.683
0.659
5
0.681
0.65
0.621
0.593
The IRR of the project will be:
A) between 9% and 10%.
B) less than 8%
C) less than 9%, more than 8%
D) more than 10%
Toaster Ovens
Bread Machines
Sale price
$80
$150
Variable costs
$40
$70
Explanation / Answer
Solution: 1) Sales Revenue $140,000 Cost of Goods Sold $63,000 Operating Expenses $67,500 Net Income $9,500 Number of Units Sold 27,000 B) $5.18 Cost per unit of product sold = Slaes Revenue / Number of units Sold $140,000/27,000 $ 5.185 2) True Solution: 3) C) ($625) Wholesale price $3 per unit Variable cost $1.75 per unit Fixed costs $7,500 per month sold 5,500 units Calculate Jame's operating income (loss) for this month. Price - Variable cost = $3 - $1.75 = $1.25 Sales = 5,500 * $1.25 = $6,875 Fixed costs $7,500 Operating loss = Sales - Fixed costs = ($625.00) 4.) Jezebel Company incurred fixed costs of $300,000. Total costs, both fixed and variable, are $450,000 when 50,000 units are produced. It sold 35,000 units during the year. Calculate the variable cost per unit. Ans: D) $3 Fixed & Variable costs $450,000 Fixed costs $300,000 Variable costs = $450,000-$300,000 = $150,000 Units produced 50,000 Sales in units 35,000 Remaining units 15,000 Variable cost per unit = $150,000/50,000 Variable cost per unit = $3 5) Ans C) $7 Toaster Ovens Bread Machines Sale price $80 $150 Variable costs $40 $70 Contribution margin = Sales - Variable costs $40 $80 Six toaster ovens & 4 bread machines $240 $320 Healthier Cook's production capacity is 1,800 machine hours per month 1,800 1,800 Contribution margin using production capacity = 1,800/$240 $7.50 $5.63 6) Ans C) 8,000 Bedford lamps, 2,250 Lowell lamps 7) Ans C) 25,000 units Beginning of quarter is 5,000 units Difference of 30,000-5,000 = 25,000 units Ending Inventory 10,000 units Total 40,000 units first quarter of the next year 30,000 units 8) Ans C) $69,330 9) Internal rate of return Ans C) less than 9%, more than 8%
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