Actg 10 - MAS Midterm Exam

St. Mary’s College of Meycauayan Meycauayan City, Bulacan Business and Accountancy Program

ACTG 10 - MANAGEMENT ACCOUNTING PART 1 MIDTERM EXAM Name: _______________________________________  Year  Year and Coure: ______________________________ _________________

Score: ________________ Da!e:

Genera" In!ruc!#on: C$ec% #& !$e num'er o& (a)e o& !$e Te! *ue!#on Se! # com("e!e and no m#(r#n!+ You can ue ,our Te! *ue!#on Se! a ,our cra!c$+ T$# eam con#! o& mu"!#("e c$o#ce .ue!#on/ a(("#ca!#oncom(u!a!#ona" and #!ua!#ona" (ro'"em )ood &or  $our+ P"eae ue !$e !e! an2er $ee!+ ERASURES 3I44 NOT 5E CONSIDERED+ Good "uc%6 *ue!#on 1 - CMA 780 9+17 - Co!-o"ume-Pro;! Co!-o"ume-Pro;!
" ()$

'irect materials

*+$

actory oerhead

($-

 Total  Total ariable ariable production costs costs Mareting costs

-*/-

 Total  Total ariable ariable costs

"0$$

Madengrad1s income tax rate is +$2, and annual 3xed costs are "0,0$$,$$$. 4xcept for an operating loss incurred in theyear of incorporation, the 3rm has been pro3table oer the last - years. Assume a ($2 increase in annual 3xed costs, a *$2 unit cost increase for direct labor, and a reduction in unit material costs of *-2, %ith no change in selling price. Madengrad Company1s breaeen point %ould increase 5decrease6 5rounded to the nearest %hole unit6 by A. 7,#0$ units. B. 5(,0*$6 units. C. (,0$+ units. '. +$/ units. *ue!#on > - CMA 1>8? ?+9 - Co!-o"ume-Pro;! Co!-o"ume-Pro;!
"** "-$+,$$$

Management plans to improe the :uality of its sole product by 5(6 replacing a component that costs "7.-$ %ith a higher;grade higher;grade unit that costs "-.-$, and 5*6 ac:uiring a "()$,$$$ pacing machine. Austin %ill depreciate the machine oer a ($;year life %ith no estimated salage alue by the straight;line method of depreciation.
B. *(,7(0 units.

C. **,-$$ units.

*ue!#on  - CIA 9@7 I+8 - Co!-o"ume-Pro;! . The sales mix consists of a composite compos ite unit of * units of = for eery - units of > 5*&-6. ixed ixed costs are "+#,-$$. The unit contribution margins for = and > are "*.-$ and "(.*$, respectiely. & (7,$$$

*ue!#on ? - ICMA 10+P>+>0 - Co!-o"ume-P Co!-o"ume-Pro;! ro;! +>0@ - Co!-o"ume-P Co!-o"ume-Pro;! ro;! +>17 - Co!-o"ume-P Co!-o"ume-Pro;! ro;! 8? ?+ - Co!-o"ume-Pro;! Co!-o"ume-Pro;!
*ue!#on 8 - CMA 1>8? ?+? - Co!-o"ume-Pro;! Co!-o"ume-Pro;!
*($,$$$ (+$,$$$

Se""#n) and adm#n#!ra!#Be co!: ixed

7$$ $$$

9ariable Income !a ra!e:

+-,$$$ +$2

or the next accounting period, if production and sales are expected to be +$,$$$ units, the company should anticipate a contribution margin per unit of  A. "(.)0.

B. "/.7$.

C. "7.($.

'. "(7.7$.

*ue!#on 10 - ICMA 10+P>+>01+0> >0? - Co!-o"ume-Pro;!
7,-$$

"()

"7

"(0-,$$$

*$

7,$$$

(-

(*

+#,$$$

All That HaII (*

+,$$$

*$

$

7(0,$$$

 That1s Gife

( Jepresent payments to production companies and are based on ticets sold. * Costs directly associated %ith the entire run of each production for costumes, sets, and artist fees. Starlight %ill also incur "-0-,$$$ of common 3xed operating charges 5administratie oerhead, facility costs, and adertising6 for the entire season, and is sub8ect to a 7$2 income tax rate. 81 ?+1 - Co!-o"ume-Pro;!
")$.$$

-*.)$

-*.)$

ixed costs %ill total "70#,0$$ if the mountaineering model is produced but %ill be only "7(0,)$$ if the touring model is produced. Siberian Si is sub8ect to a +$2 income tax rate. - ICMA 10+P>+18@ - Co!-o"ume-Pro;!
0$

ixed costs

--

 The mareting department has estimated sales for the coming year at (/-,$$$ units, %hich is %ithin the releant range of Phillips1 cost structure. Phillips1 brea;een olume 5in units6 and anticipated

operating income for the coming year %ould amount to A. #0,*-$ units and "7,-+7,/-$ of operating income. B. )*,-$$ units and "#,*-$,$$$ of operating income. C. #0,*-$ units and "/,)/-,$$$ of operating income. '. )*,-$$ units and "/,)/-,$$$ of operating income.

*ue!#on 1 - ICMA 10+P>+>19 - Co!-o"ume-Pro;!
" ($ * +

Production of Crates and Boxes inoles 8oint processes and use of the same facilities. The total 3xed factory oerhead cost is "*,$$$,$$$ and total 3xed selling and administratie costs are ")+$,$$$. Production and sales are scheduled for -$$,$$$ units of Crates and /$$,$$$ units of Boxes. GaIar maintains no direct materials, %or;in;process, or 3nished goods inentory. GaIar can reduce direct material costs for Crates by -$2 per unit, %ith no change in direct labor costs. o%eer, it %ould increase machine;hour production time by (;(* hours per unit. or Crates, ariable oerhead costs are allocated based on machine hours. Ehat %ould be the e@ect on the total contribution margin if this change %as implemented A. "*-$,$$$ decrease. B. "7$$,$$$ increase. C. "(*-,$$$ increase. '. "(,*-$,$$$ increase. *ue!#on 1? - CMA 78> ?+>8 - Co!-o"ume-Pro;!
*-$,$$$ (-$,$$$ /-,$$$ ($$,$$$ #*-,$$$

Selling and NLA 9ariable

*$$,$$$

Selling and NLA ixed

*-$,$$$

O(era!#n) #ncome

+/-,$$$

 The breaeen point 5rounded to the nearest peso6 for Barnes Corporation for the current year is A. "(+0,7+(. B. "/*#,/7$. C. "()(,)(). '. "070,70+. *ue!#on 19 - CIA 9@ I+1@ - Co!-o"ume-Pro;!
C. "+ '. "*$ *ue!#on 17 - ICMA 10+P>+>09 - Co!-o"ume-Pro;!
B. "7/-,$$$.

C. "(,*$$,$$$.

'.

*ue!#on 1 - CMA 780 9+19 - Co!-o"ume-Pro;!
*+$

actory oerhead

($-

 Total ariable production costs Mareting costs

-*/-

 Total ariable costs

"0$$

Madengrad1s income tax rate is +$2, and annual 3xed costs are "0,0$$,$$$. 4xcept for an operating loss incurred in the year of incorporation, the 3rm has been pro3table oer the last - years. Assume a ($2 increase in annual 3xed costs, a *$2 unit cost increase for direct labor, and a reduction in unit material costs of *-2, %ith no change in selling price. After incorporating these changes, Madengrad Company1s contribution margin ratio %ould be A. 0#2 B. 702 C. 0+2 '. 7+2 *ue!#on 1@ ; C
#ed ar#a'"e

To!a"

Co!

ReBenue

(

"($$

")-

"()-

")-

"#$

*

-$

/$

(*$

--

#$

7

77

0-

#)

--

#$

+

*-

0/

#*

/7

#$

-

*$

/-

#-

($/

#$

?+0> 11 - Co!-o"ume-Pro;!
Phillips1 cost structure. Cost management initiaties are expected to yield a *$2 reduction in ariable costs and a reduction of "/-$,$$$ in 3xed costs. Phillips1 cost structure for the coming year %ill include a A. per unit contribution margin of "/* and 3xed costs of "--. B. contribution margin ratio of 0)2 and operating income of "/,$-$,$$$. C. ariable cost ratio of 7*2 and operating income of "#,0$$,$$$. '. total contribution margin of "(-,7$$,$$$ and 3xed costs of "),*-$,$$$ *ue!#on >0 - CMA 78> ?+0 - Co!-o"ume-Pro;!
"(,-$$,$$$ *-$,$$$ (-$,$$$ /-,$$$ ($$,$$$ #*-,$$$ *$$,$$$ *-$,$$$ +/-,$$$

or the coming year, the management of Barnes Corporation anticipates a ($2 increase in sales, a (*2 increase inariable costs, and a "+-,$$$ increase in 3xed expenses. The breaeen point for next year %ill be A. "+/+,$$$. B. "/*#,$*/. C. "*(+,$(). '. ")0*,($7. *ue!#on >1 - CIA 1187 III+81 - Co!-o"ume-Pro;!
"** -2

#ed co! and e(ene: Manufacturing oerhead

"-,-#),/*$

Neneral and administratie

"7,/7*,+)$

4@ectie income tax rate

+$2

 The number of units the company must sell in the coming year in order to reach its breaeen point is& A. 7)),)$$ units. B. -)7,*$$ units. C. -(),+$$ units. '. #/*,$$$ units. *ue!#on >> - CMA 1>80 ?+7 - Co!-o"ume-Pro;!
"($.$$

'irect materials 'irect labor

7$$,$$$ "(-.$$

5*.$$6 57.$$6

ixed oerhead Fet income per unit "*.$$

57.$$6 5-.$$6

57.$$6

5+.$$6 "7.$$

 The budgeted unit sales e:ual the current unit demand, and total 3xed oerhead for the year is budgeted at "#/-,$$$.Assume that the company plans to maintain the same proportional mix.
numerical calculations, Multirame rounds tothe nearest cent and unit.  The total number of units needed to brea een if sales %ere budgeted at (-$,$$$ units of plastic frames and 7$$,$$$units of glass frames %ith all other costs remaining constant is A. (-7,#+) units. '. (/(,#-) units.

B. 70-,(0) units.

C. +(),+-- units.

*ue!#on > - ICMA 10+P>+>1 - Co!-o"ume-Pro;!
" ) 7

Machine hours per unit

" ($ -

( *

* +

Production of Crates and Truns inoles 8oint processes and use of the same facilities. The total 3xed factory oerheadcost is "*,$$$,$$$ and total 3xed selling and administratie costs are ")+$,$$$. Production and sales are scheduled for-$$,$$$ Crates and /$$,$$$ Truns. GaIar has a normal capacity to produce a total of *,$$$,$$$ units in anycombination of Crates and Truns, and maintains no direct materials, %or;in;process, or 3nished goods inentory. 'ue to plant renoations GaIar ? - CIA 987 III+@9 - Co!-o"ume-Pro;!
"-.$$ +.$$

Manufacturing oerhead

0.$$

Selling and administratie costs

7.$$

 Total ariable cost per unit

"().$$

Annua" ;ed o(era!#n) co!: Manufacturing oerhead

"0,*$$,$$$

Selling and administratie costs

7,/$$,$$$

 Total annual 3xed cost

"#,#$$,$$$

 The company has learned that a ne% direct material is aailable that %ill increase the :uality of its product. The ne%material %ill increase the direct material costs by "7 per unit. The company %ill increase the selling price of the productto "-$ per unit and increase its mareting costs by "(,-/-,$$$ to adertise the higher;:uality product. The number ofunits the company has to sell in order to earn a ($2 before;tax return on sales %ould be& A. 77/,-$$ units. '. +/),(*- units.

B. +(*,-$$ units.

C. 7+0,)/- units.

*ue!#on >9 - ICMA 10+P>+>07 - Co!-o"ume-Pro;!
"7-,$$$

 Typesetting

(),-$$

'epreciation on 4:uipment

#,7*$

Neneral and Administratie

/,-$$

Miscellaneous ixed Costs

+,+$$

Printing and Binding

7$,$$$

Sales sta@ commissions 5*2 of selling price6

-,+$$

Boostore commissions 5*-2 of selling price6

0/,-$$

Author1s Joyalties 5($2 of selling price6

*/,$$$

 Total costs at production of 0,$$$ copies

"*$+,0*$

A. 0,(## copies. B. *,$/0 copies. C. -,+(* copies. '. -,*$/ copies. *ue!#on >7 - CMA 78> ?+>> - Co!-o"ume-Pro;!
"($.$$

"+.$$

(-,$$$

Product B

(-.$$

).$$

*$,$$$

Product C

().$$

#.$$

-,$$$

Assuming that total 3xed costs %ill be "(-$,$$$ and the mix remains constant, the breaeen point 5rounded to the next higher %hole unit6 %ill be A. *(,+*# units. B. *$,+-- units. C. *(,)(# units. '. 0,)() units. *ue!#on > - CIA 98 I+11 - Co!-o"ume-Pro;! @ - CIA 98? III+? - Co!-o"ume-Pro;! ? Company for the current year of operations. To!a" Per Un#! Sales 5+$,$$$ units6

"(,$$$,$$$

Ja% materials 'irect labor

"*-

(0$,$$$ *)$,$$$

+ /

ac!or, oBer$ead: 9ariable ixed

)$,$$$

*

70$,$$$

Se""#n) and )enera" e(ene: 9ariable ixed

(*$,$$$

7

**-,$$$

Assuming that =>? Company sells )$,$$$ units, %hat is the maximum that can be paid for an adertising campaign %hile still breaing een A. "(7-,$$$ B. "0#-,$$$ C. "(,$(-,$$$

'. "-7-,$$$ *ue!#on >8 - CMA 780 9+1 - Co!-o"ume-Pro;!
*+$ ($-

 Total ariable production costs

-*-

Mareting costs  Total ariable costs

/"0$$

Madengrad1s income tax rate is +$2, and annual 3xed costs are "0,0$$,$$$. 4xcept for an operating loss incurred in theyear of incorporation, the 3rm has been pro3table oer the last - years.  The annual sales olume re:uired for Madengrad Company to brea een is A. ),+$$ units. '. **,$$$ units.

B. ((,$$$ units.

C. (7,))) units.

*ue!#on 0 ;
"($$ /*-$,$$$ 7-2


*ue!#on > - CMA 1>@7 9+1 - Co!-o"ume-Pro;!
'. The di@erence bet%een the breaeen point in sales and cash !o% breaeen. *ue!#on  - CMA 78 ?+> - Co!-o"ume-Pro;!
9ariable Costs 'irect material

"/.$$

'irect labor

7.-$

Manufacturing oerhead

+.$$

 Total ariable manufacturing cost

(+.-$

Selling expenses

(.-$

 Total ariable cost

"(0.$$

 The maximum after;tax pro3t that can be earned by 'elphi Company from sales of the ne% product during the next 3scal year is A. "7$,$$$. B. "(($,$$$. C. "00,$$$. '. "-$,$$$. *ue!#on ? - CIA 118> I+1 - Co!-o"ume-Pro;!
"(-

"()

"*$

"*-

9ariable cost

"/

"((

"($

"(0

A

5

C

D

7

+

*

7

Un#! Produced (er Mac$#ne our

 The product that is the most pro3table for the manufacturer in this situation is A. Product '. B. Product C. C. Product A. '. Product B. *ue!#on 9 - CMA 1>80 ?+? - Co!-o"ume-Pro;!
"($.$$

'irect materials 'irect labor

7$$,$$$ "(-.$$

5*.$$6 57.$$6

ixed oerhead Fet income per unit "*.$$

57.$$6 5-.$$6

57.$$6

5+.$$6 "7.$$

 The budgeted unit sales e:ual the current unit demand, and total 3xed oerhead for the year is budgeted at "#/-,$$$.Assume that the company plans to maintain the same proportional mix.
product at a rate of "7.-$ a unit and %ill continue %hether or not production ceases. 'epreciation on the special e:uipment amounts to "*$,$$$ a year. - Co!-o"ume-Pro;! +>00 - Co!-o"ume-Pro;!
"(-

9ariable cost per unit

)

($

4xpected sales 5units6

*$,$$$

-,$$$

 Total pro8ected 3xed costs for the company are "7$,$$$. Assume that the product mix %ould be the same at the breaeen point as at the expected leel of sales of both products. Ehat is the pro8ected number of units 5rounded6 of Product C to be sold at the breaeen point A. ((,-7) units.

B. #,*7( units.

C. (-,$$$ units.

'. *,7$) units.

*ue!#on 8 - ICMA 10+P>+>08 - Co!-o"ume-Pro;! Selling price per unit 9ariable costs per unit

"($$

"(7$ " )$

"($$

Ja% materials used per unit + lbs. ($ lbs. 4agle Brand has (,$$$ lbs. of ra% materials %hich can be used to produce Products = and >. Ehich one of the alternaties belo% should 4agle Brand accept in order to maximiIe contribution margin A. *-$ units of product =. B. *$$ units of product = and -$ units of product >. C. *$$ units of product = and *$ units of product >. '. ($$ units of product >. *ue!#on ?0 - CMA 781 ?+@ - Co!-o"ume-Pro;! - Co!-o"ume-Pro;! ? Company for the current year of operations. To!a" Per Un#! Sales 5+$ $$$ units6

"( $$$ $$$

"*-

Ja% materials 'irect labor

(0$,$$$ *)$,$$$

+ /

ac!or, oBer$ead: 9ariable ixed

)$,$$$

*

70$,$$$

Se""#n) and )enera" e(ene: 9ariable ixed

(*$,$$$

7

**-,$$$

o% many units does =>? Company need to produce and sell to mae a before;tax pro3t of ($2 of sales A. #$,$$$ units. B. 0-,$$$ units. C. 70,-0* units. '. *-,$$$ units. *ue!#on ?> - CMA 1>8? ?+> - Co!-o"ume-Pro;! 80 ?+1 - Co!-o"ume-Pro;! - Co!-o"ume-Pro;!
*+$ ($-

 Total ariable production costs Mareting costs  Total ariable costs

-*/-

"0$$

Madengrad1s income tax rate is +$2, and annual 3xed costs are "0,0$$,$$$. 4xcept for an operating loss incurred in theyear of incorporation, the 3rm has been pro3table oer the last - years. +>1> - Co!-o"ume-Pro;!
Eilinson Company sells its single product for "7$ per unit. The contribution margin ratio is +-2 and Eilinson has 3xed costs of "($,$$$ per month.
A. "+#,-$$.

B. "+$,-$$

C. "#$,$$$.

'. "7$,-$$.

*ue!#on ?7 - CIA 9 I+11 - Co!-o"ume-Pro;! 8 - Co!-o"ume-Pro;!
"7.*-

'irect labor

+.$$

'istribution

./-

 The company %ill also be absorbing "(*$,$$$ of additional 3xed costs associated %ith this ne% product. A corporate 3xed charge of "*$,$$$ currently absorbed by other products %ill be allocated to this ne% product. o% many surge protectors 5rounded to the nearest hundred6 must Bruell 4lectronics sell at a selling price of "(+ per unit to gain "7$,$$$ additional income before taxes A. ($,/$$ units. B. *$,$$$ units. C. *-,$$$ units. '. (*,($$ units. *ue!#on ?@ - CIA 118 I+1> - Co!-o"ume-Pro;!
"*7,/$$

Co! Y &

+/,*)$

"-*,0)$ (+(,)+$

")0,+#$ *-*,(0$

--(,0$$

 The company is concerned about its current operating performance that is summariIed as follo%s. Sales 5"(*.-$ per unit6

"7$$,$$$

9ariable costs

()$,$$$

Fet operating loss

5+$,$$$6

o% many additional units should hae been sold in order for the company to brea een A. ),$$$

B. (0,$$$

C. 7*,$$$

'. (*,)$$

*ue!#on ?8 - CMA 1>@7 9+1> - Co!-o"ume-Pro;!
B. Contribution margin per unit for each additional unit sold. C. Nross margin per unit for each additional unit sold. '. 9ariable costs per unit for each additional unit sold. *ue!#on 90 - CMA 780 9+1? - Co!-o"ume-Pro;!
*+$

actory oerhead

($-

 Total ariable production costs Mareting costs

-*/-

 Total ariable costs

"0$$

Madengrad1s income tax rate is +$2, and annual 3xed costs are "0,0$$,$$$. 4xcept for an operating loss incurred in the year of incorporation, the 3rm has been pro3table oer the last - years. or Madengrad Company to achiee an after;tax net income of "-+$,$$$, annual sales reenue must be A. "*(,+*$,$$$ B. "*,/$$,$$$ C. "**,-$$,$$$ '. "*7,)-$,$$$ *ue!#on 91 - CIA 1187 III+80 - Co!-o"ume-Pro;! - ICMA 10+P>+188 - Co!-o"ume-Pro;! @ - Co!-o"ume-Pro;!
"7.*-

'irect labor

+.$$

'istribution

./-

 The company %ill also be absorbing "(*$,$$$ of additional 3xed costs associated %ith this ne% product. A corporate 3xed charge of "*$,$$$ currently absorbed by other products %ill be allocated to this ne% product.
surge protectors is A. ),-$$ units. B. ($,$$$ units. C. *$,$$$ units. '. (-,$$$ units. *ue!#on 9? - CIA 9@7 I+@ - Co!-o"ume-Pro;! . The sales mix consists of a composite unit of * units of = for eery - units of >5*&-6. ixed costs are "+#,-$$. The unit contribution margins for = and > are "*.-$ and "(.*$, respectiely. Considering the company as a %hole, the number of composite units to brea een is& A. **,-$$ B. +,-$$ C. ),*-$ '. (,0-$ *ue!#on 99 - CMA 7@ 9+> - Co!-o"ume-Pro;!
Sales of Jolls at "(.*$unit

9olume

9olume

Probability

Probability

*-$,$$$

.7$

*$$,$$$

.*$

7$$,$$$

.+$

*-$,$$$

.-$

7-$,$$$

.*$

7$$,$$$

.*$

+$$,$$$

.($

7-$,$$$

.($

 The costs associated %ith the t%o products hae been estimated by Nleason1s cost accounting department and are sho%n as follo%s. 'essert Jolls
" .+$

" .*-

'irect labor per unit

.7-

.7$

9ariable oerhead per unit .+$

.*$

Production tooling

+),$$$

*-,$$$

Adertising

7$,$$$

*$,$$$

Nleason treats production tooling as a current operating expense rather than capitaliIing it as a 3xed asset. The expected alue of Nleason1s operating pro3t directly traceable to the sale of froIen desserts is A. "(#),*-$. B. "(*$,*-$. C. Some amount other than those gien. '. "(-$,*-$. *ue!#on 97 - CMA 7@ ?+11 - Co!-o"ume-Pro;!
A. *$,$$$ B. (#,*-$ C. (/,-$$ '. Some amount other than those gien. *ue!#on 9 - CMA 781 ?+11 - Co!-o"ume-Pro;!
C. Hoint costing.

'. Absorption

*ue!#on 9@ - CMA 1>80 ?+9 - Co!-o"ume-Pro;!
"($.$$ 5*.$$6

'irect materials 'irect labor 57.$$6 ixed oerhead 57.$$6 Fet income per unit "*.$$

7$$,$$$ "(-.$$ 57.$$6 5-.$$6 5+.$$6 "7.$$

 The budgeted unit sales e:ual the current unit demand, and total 3xed oerhead for the year is budgeted at "#/-,$$$.Assume that the company plans to maintain the same proportional mix. 80 ?+> - Co!-o"ume-Pro;! 81 ?+1? - Co!-o"ume-Pro;!
Touring

Selling price

")).$$

")$.$$

9ariable costs

-*.)$

-*.)$

ixed costs %ill total "70#,0$$ if the mountaineering model is produced but %ill be only "7(0,)$$ if the touring model isproduced. Siberian Si is sub8ect to a +$2 income tax rate.  The total sales reenue at %hich Siberian Si Company %ould mae the same pro3t or loss regardless of the si model itdecided to produce is A. "))$,$$$.

B. "0)0,+$$.

C. "+**,+$$.

'. "#*+,$$$.

*ue!#on 71 - CMA 7@ 9+>> - Co!-o"ume-Pro;!
Nleason Co. has t%o products, a froIen dessert and ready;to;bae breafast rolls, ready for introduction. o%eer, plant capacity is limited, and only one product can be introduced at present.  Therefore, Nleason has conducted a maret study, at a cost of "*0,$$$, to determine %hich product %ill be more pro3table. The results of the study follo%. Sales of 'esserts Sales of Jolls at "(.)$unit at "(.*$unit 9olume

Probability

9olume

Probability

*-$,$$$

.7$

*$$,$$$

.*$

7$$,$$$

.+$

*-$,$$$

.-$

7-$,$$$

.*$

7$$,$$$

.*$

+$$,$$$

.($

7-$,$$$

.($

 The costs associated %ith the t%o products hae been estimated by Nleason1s cost accounting department and are sho%n as follo%s. 'essert Jolls
" .+$

" .*-

'irect labor per unit

.7-

.7$

9ariable oerhead per unit .+$

.*$

Production tooling

+),$$$

*-,$$$

Adertising

7$,$$$

*$,$$$

Nleason treats production tooling as a current operating expense rather than capitaliIing it as a 3xed asset. Applying a deterministic approach, Nleason1s reenue from sales of froIen desserts %ould be A. "*(0,$$$. B. Some amount other than those gien. C. "-+$,$$$. '. "-+#,$$$. *ue!#on 7> - ICMA 10+P>+>01+01+>01 - Co!-o"ume-Pro;!
*$7,$$$

All That HaII (*+,$$$

"()

"7

(-

(*

+#,$$$

*$$

7

(0,$$$

(Jepresent payments to production companies and are based on ticets sold. *Costs directly associated %ith the entire run of each production for costumes, sets, and artist fees. Starlight %ill also incur "-0-,$$$ of common 3xed operating charges 5administratie oerhead, facility costs, and adertising6 for the entire season, and is sub8ect to a 7$2 income tax rate.
'irect material 'irect labor

"/.$$ 7.-$

Manufacturing oerhead

+.$$

 Total ariable manufacturing cost Selling expenses  Total ariable cost

(+.-$ (.-$

"(0.$$

'elphi Company1s management has stipulated that it %ill not approe the continued manufacture of the ne% productafter the next 3scal year unless the after;tax pro3t is at least "/-,$$$ the 3rst year.  The unit selling price to achiee thistarget pro3t must be at least A. "70.0$.

B. "7#.$$.

C. "7/.$$.

'. "7+.0$.

*ue!#on 7? - CMA 78 9+>9 - Co!-o"ume-Pro;!
"+.$$

"7.$$

9ariable manufacturing cost "*.$$

"(.-$

ixed manufacturing cost 9ariable selling cost

" ./-

" .*$

"(.$$

"(.$$

 The sales manager has had a "(0$,$$$ increase in the budget allotment for adertising and %ants to apply the money to the most pro3table product. The products are not substitutes for one another in the eyes of the company1s customers. Suppose the sales manager chooses to deote the entire "(0$,$$$ to increased adertising for =>;/.  The minimum increase in sales units of =>;/ re:uired to o@set the increased adertising is& A. 0+$,$$$ units. B. (0$,$$$ units. C. (*),$$$ units. '. )$,$$$ units. *ue!#on 79 - ICMA 0@+P+1> - Co!-o"ume-Pro;! +9? - Co!-o"ume-Pro;!
/$2 of sales

Neneral L administratie expenses

"7$$,$$$

Selling expense

"($$,$$$ plus ($2 of sales

'ebt outstanding

"- million R )2 interest rate

4@ectie tax rate

7-2

Common shares outstanding

* million

She is no% interested in the sensitiity of earnings per share to sales forecast changes. A ($2 sales increase %ould increase earnings per share by A. *$.$ cents per share. B. /.$ cents per share. C. (7.$ cents per share.

'. ($.+ cents per share. *ue!#on 7 - CMA 78 9+>7 - Co!-o"ume-Pro;!
"+.$$

"7.$$

9ariable manufacturing cost "*.$$

"(.-$

ixed manufacturing cost 9ariable selling cost

" ./"(.$$

" .*$ "(.$$

 The sales manager has had a "(0$,$$$ increase in the budget allotment for adertising and %ants to apply the money to the most pro3table product. The products are not substitutes for one another in the eyes of the company1s customers. Suppose the sales manager chooses to deote the entire "(0$,$$$ to increased adertising for B';+.  The minimum increase in sales pesos of B';+ re:uired to o@set the increased adertising %ould be A. "(,0$$,$$$ B. "7*$,$$$ C. "#0$,$$$ '. "(0$,$$$ *ue!#on 7@ - CMA 1> ?+? - Co!-o"ume-Pro;! +>1? - Co!-o"ume-Pro;!
"*$ "((-,$$$

+18 - Co!-o"ume-Pro;!
*($

Bolger1s total 3xed costs aggregate "70$,$$$. As Bolger1s labor agreement is expiring at the end of the year, management is concerned about the e@ect a ne% agreement %ill hae on its unit breaeen point. The controller performed a sensitiity analysis to ascertain the estimated e@ect of a "($ per unit direct labor increase and a "($,$$$ reduction in 3xed costs. Based on these data, it %as determined that the breaeen point %ould A. decrease by (,$$$ units. B. increase by 7/- units.

C. decrease by (*- units. '. increase by -$$ units

END O TEST *UESTIONS SET