1.Truckel,Inc.currently manufactures a wicket as its main product.The costs per unit are as follows:Direct materials and direct labor$11 Variable overhead$5 Fixed overhead$8 Total$24
Saran Company has contacted Truckel with an offer to sell it 5,000 of the wickets for $18each.If Truckel makes the wickets,variable costs are$16 per unit.Fixed costs are$8 per unit;however,$5 per unit is unavoidable.Should Truckels make or buy the wickets?
a.Buy;savings=$15,000
b.Buy;savings=5,000
c.Make;savings=10,000
d.Mkae;savings=5,000
2.Galley industries can produce 100units of a necessary component part with the following costs:Direct Materials$20,000 Direct Labor9,000 Variable Overhead21,000 Fixed Overhead8,000
If Galley industries purchases the component externally,$2,000 of the fixed costs can be avoided.Below what external price for the 100 units would Galley choose to buy instead of make?
a.50,000
b.56,000
c.44,000
d.52,000
3.Which decision will involve no incremental revenues?
a.Make or buy decision
b.Drop a product line
c.Accept a special order
d.Additional processing decision
4.An opportunity cost
a.should be initially recorded as an asset
b.is the cost of a new product proposal
c.is the potential benefit that may be obtained by following an alternative course of action
d.is classified as manufacturing overhead
5.Brislin Products has a new product going on the market next year.The following data are projections for production and sales:Variable costs$250,000 Fixt costs450,000 ROI 14% Investment2,000,000 Sales200,0000units
5-1.What is the target selling price per unit?
a.$4.90
b.3.50
c.2.65
d.3.65
5-2.What is the markup percentage?
a.112%
b.20
c.62
d.40
5-3.What would the markup percentage be if only 150,000 units were sold and Brislin still wanted to earn the desired ROI?
a.32.95%
b.53.33
c.35
d.44
6.A master budget consists of
a.an interrelated long-term plan and operating budgets
b.financial budgets and a long-term plan
c.interrelated financial budgets and operating budgets
d.all the accounting journals and ledgers used by a company
7.The starting point in preparing a master budget is the preparation of the
a.production budget
b.sales budget
c.purchasing budget
d.personnel budget
8.Which one of the following is not needed in preparing a production budget?
a.Budgeted unit sales
b.Budgeted raw materials
c.Beginning finished goods units
d.Ending finished goods units
9.A company budgeted unit sales of 204,000units for Jan.2013 and 240,000units for Feb.2013.The company has a policy of having an inventory of units on hand at the end of each month equal to 30%of next month’s budgeted unit sales.If there were 61,200units of inventory on hand on Dec.31,2012.How many units should be produced in Jan,2013 in order for the company to meet its goals?
a.214,800units
b.204,000
c.193,200
d.276,000
10.At Jan1,2013.Deer Corp.Has beginning inventory of 2,000 surfboards.Deer estimates it will sell 10,000 units during the first quarter of 2013 with a 12% increase in sales each quarter.Deer’s policy is to maintain an ending inventory equal to 25% of the next quarter’s sales. Each surfboard costs$100 and is sold for $150.How much is budgeted sales revenue for the third quarter of 2013?
a.450,000
b.1,950,000
c.1,881,600
d.12,544
11.Doe Manufacturing plans to sell 6,000purple lawn chairs during May,5,700 in June,and 6,000 during July.The company keeps 15%of the next month’s sales as ending inventory.How many units should Doe produce during June?
a.5,745
b.6,600
c.5,655
d.not enough information to determine
12.Dingo Division’s operating results include:controllable margin of %150,000,sales totaling $1,200,000, and average operating assets of 500,000.Dingo is considering a project with sales of 100,000,expenses of 86,000,and an investment of average operating assets of200,000.Dingo’s required rate of return is 9%.Should Dingo accept this project?
a.Yes,ROI will drop by6.6% which is still above the minimum required rate of return
b.No,the return is less than the required rate of 9%
c.Yes,ROI still exceeds the cost of capital
d.No,ROI will decrease to 7%
13.Grown Industries reported the following items for 2013:Income tax expense$60,000 Contribution margin200,000 Controllable fixed costs80,000 Interest expense40,000 Total operating assets650,000
How much is controllable margin?
a.200,000
b.120,000
c.60,000
d.20,000
14.Griffin Corp.is evaluating its Piquette division, and investment center.The division has a60,000 controllable margin and 400,000 of sales.How much will Griffin’s average operating assets be when its retrun on investment is10%?
a.600,000
b.660,000
c.400,000
d.340,000
15.An investment center generated a contribution margin of 400,000,fixed costs of 200,000 and sales of 2,000,000.The center’s average operating assets were 800,000.How much is the return on investment?
a25%
b175
c50
d75
