FINANCE

10) Tany Corporation is a small table manufacturing company operating in the north of Puerto Rico.
Managers estimate the following costs per unit (one table)  
Direct material (DM) $6.00
Direct labor (DL) $4.00
Variable manufacturing overhead (VMO) $3.00
Variable administrative expenses (VAE) $1.00
 The estimated contribution margin is 30%
Monthly fixed costs are  
Manufacturing $10,000.00
Administrative $5,000.00

 

Total unit sold during last month is 2525, what is the total operating income.

[removed] a. between $100 and $120
[removed] b. between $120 and $140
[removed] c. between $140 and $160
[removed] d. between $160 and $180

 

11) BC Company estimates the following data for the coming month: total variable costs $60,000.00, income tax rate 30%, contribution margin percentage 60%. Find the estimated total sales for the coming month.

[removed] a. $100,000
[removed] b. $60,000 / 40%
[removed] c. $60,000 / 60%
[removed] d. $60,000 X 60%

 

12) If a company raises its required net income

[removed] a. the tax rate will decrease
[removed] b. break even point is negative
[removed] c. required contribution margin increases
[removed] d. required contribution margin decreases

13)If a company raises its required operating profit

[removed] a. break even point is negative
[removed] b. break even point is zero
[removed] c. required contribution margin increases
[removed] d. required contribution margin decreases

 

 

 

 

 

 

 

 

 

14) Copy of

XYZ has three products X, Y and Z. The following information pertains to these products X, Y, and Z. Contribution margin percentages are 40%, 50%, and 40% respectively. Sales mix percentages are 20%, 30%, and 50% respectively. Monthly fixed costs are estimated to be $100.00. The weighted average contribution margin percentage is

[removed] a. 43%
[removed] b. 40%
[removed] c. 30%
[removed] d. 0

15) Which of the following examples is a short term decision?

[removed] a. Make or buy decision
[removed] b. Purchase of land
[removed] c. Issuing bonds
[removed] d. Joint venture
[removed] e. Purchase of building

 

16) Sales (in units) 60,000
Selling price per unit 25
Manufacturing costs per unit:  
  Materials 5
  Direct labor 4
  Overhead  
        Variable 4
         Fixed 6
    Total 19
Gross margin 6
Selling and admin. Expenses per unit 2
Operating income 4
   
A company in a foreign market offer to buy and the offer specifies the following data
units to be sold 10000
price per unit 20
If the Company accepts the special offer, the incremental profit would be

 

[removed] a. $70,000.00
[removed] b. ($70,000.00)
[removed] c. $10,000.00
[removed] d. ($10,000.00)
 

 

 

 

 

 

17) Total Costs

Unit Cost
Direct materials 20,000 2.00
Direct labor 25,000 2.50
Variable overhead 15,000 1.50
Fixed overhead (non-avoidable) 24000 2.40
Fixed overhead (avoidable) 26,000 2.60
Purchase cost 85,999

Should the company produce the product internally?

[removed] a. Yes  
[removed] b. No  
[removed] c. Indifferent to to make or to buy  
[removed] d. Yes if the market price per unit covers the fixed cost per unit.  
18) Sales (in units) 60,000
Selling price per unit 25
Manufacturing costs per unit:
Materials 5
Direct labor 4
Overhead
Variable 4
Fixed 6
Total 19
Gross margin 6
Selling and admin. Expenses per unit (fixed) 2
Operating income 4
A company in a foreign market offer to buy and the offer specifies the following data
units to be sold 10,000
price per unit 13.1
Should the company sell this special order?
[removed] a. Yes, accept  
[removed] b. No, reject  
[removed] c. Indifferent to reject or not  
[removed] d. Always reject  

 

Which of the following costs should be considered in short term decisions?

 

 

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