Question :
COMPREHENSIVE EXAMINATION B
(Chapters 5 – 9)
Approximate : 1311559
COMPREHENSIVE EXAMINATION B
(Chapters 5 – 9)
Approximate
ProblemTopicPoints Minutes
B – IMultiple Choice……………………2222
B – IICost-Volume-Profit…………………2416
B – IIITransfer Pricing……………………1212
B – IVBudgeting……………………….1815
B – VContribution Margin………………..1410
B – VIIncremental Analysis……………….. 1010
10085
Checking Work…………………………….. 5
90
Problem B – I — Multiple Choice (22 points)
Circle the one best answer.
1. Halladorn, Inc. sells a single product with a contribution margin of $9 per unit, fixed costs of $54,000, and sales for the current year of $82,800. How much is Juniper’s break-even point?
a.15,200 units
b.$6,000
c.6,000 units
d.9,200 units
Use the following information for questions 2 and 3.
At January 1, 2014, Top Surf, Inc. has beginning inventory of 2,100 surfboards. Top Surf estimates it will sell 6,000 units during the first quarter of 2014 with a 10% increase in sales each quarter. Top Surf’s policy is to maintain an ending inventory equal to 10% of the next quarter’s sales. Each surfboard costs $80 and is sold for $120.
2. How many boards should Top Surf produce during the first quarter of 2014?
a.6,660
b.4,560
c.5,940
d.6,000
3. How much is budgeted sales revenue for Top Surf the third quarter of 2014?
a.$7,260
b.$720,000
c.$864,000
d.$871,200
4. Jayson Company’s variable costs are 40% of sales. The company is contemplating an advertising campaign that will cost $34,000. If sales are expected to increase $50,000, by how much will the company’s net income increase/(decrease)?
a.$30,000
b.$20,000
c.($14,000)
d.($4,000)
5. Finnegan’s Grill has total fixed costs of $96,000 and a contribution margin ratio of 40%. How much are total variable costs incurred at the break-even level of activity?
a.$96,000
b.$240,000
c.$144,000
d.$160,000
6. A company desires to earn target net income of $42,000 from the sale of its product. If the unit sales price is $12, unit variable cost is $7, and total fixed costs are $56,000, how many units must the company sell to earn its target net income?
a.19,600 units
b.11,200 units
c.2,800 units
d.33,600 units
7. Advantage Production has a policy of having sufficient direct materials inventory on hand at the end of each month equal to 25% of next month’s budgeted production needs. The company has budgeted production of 12,000 clipboards in June and 15,000 units in July. It takes 1.5 pounds of resin to produce one clipboard and 4,500 pounds of resin were on hand on May 31. How many pounds of resin should be purchased in the month of June?
a.13,500 pounds
b.17,250 pounds
c.19,125 pounds
d.11,250 pounds
8. Bates Boogie Boards has budgeted direct materials purchases of $120,000 in March and $160,000 in April. Past experience indicates that the company pays for 40% of its purchases in the month of purchase and the remaining 60% in the next month. During April, the following items were budgeted:
Wages Expense$32,000
Purchase of office equipment13,000
Selling and Administrative Expenses25,000
Depreciation Expense9,000
How much are budgeted cash disbursements for April?
a.$214,000
b.$223,000
c.$206,000
d.$127,000
9. Shan Stone manufactures a product with a unit variable cost of $26 and a unit sales price of $38. Fixed manufacturing costs were $48,000 when 10,000 units were produced and sold, equating to $4.80 per unit. The company has a one-time opportunity to sell an additional 1,500 units at $29 each in an international market which would not affect its present sales. The company has sufficient capacity to produce the additional units. How much is the relevant income or loss effect of accepting the special order?
a.($2,250)
b.$4,500
c.$43,500
d.($16,500)
10. Hoover, Inc. is unsure of whether to sell its product assembled or unassembled. The unit cost of the unassembled product is $9, while the added cost of assembling each unit is estimated at $5. Unassembled units can be sold for $22, while assembled units could be sold for $31 per unit. What decision should Hoover make?
a.Sell before assembly, the company will earn $4 per unit.
b.Sell before assembly, the company will save $5 per unit.
c.Process further, the company will earn $5 less per unit.
d.Process further, the company will earn $4 more per unit.
*11.Bourdon Enterprises sells its product for $30 per unit. During 2014, it produced 12,000 units and sold 10,000 units (there was no beginning inventory). Costs per unit are: direct materials $6, direct labor $2, and variable overhead $1. Fixed costs are: $126,000 manufacturing overhead, and $32,000 selling and administrative expenses. How much is the manufacturing cost per unit under absorption costing?
a.$9.00
b.$22.17
c.$21.60
d.$19.50
