Fall ’12 MGMT 640 Section 1121

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Fall ’12 MGMT 640 Section 1121

Post-Lecture, Question 3

If your company follows the principle of management by exception, which of the following departures from the budget would most likely be investigated?

Depreciation Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper ($2,000).

Rent ($100).

Labor ( $800 ).

Water ( $5 00).

Multiple Choice, Question 87

Shula’s 347 Grill has budgeted the following costs for a month in which 1,600 steak dinners will be produced and sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,700; depreciation, $800; and other fixed costs, $600. Each steak dinner sells for $1

4.0

0 each. How much would Shula’s profit increase if 10 more dinners were sold?

$14 0.00

$58.00

$62.60

$82.00

Multiple Choice, Question 91

Paradise Pottery had the following costs in May when production is 800 ceramic pots: materials, $8,700; labor (variable), $2,900; depreciation, $1,100; rent, $900; and other fixed costs, $

1,500

. If production changes to 850 units, which will stay the same?

total cost per unit

variable cost per unit

fixed cost per unit

total variable cost

Multiple Choice, Question 97

Raron’s Rockers is in the process of preparing a production cost budget for August. Actual costs in July for 120 rocking chairs were:

Materials cost		$4,800
Labor cost		3,000
Rent	1,500
Depreciation	2,500
Other fixed costs	3,200
Total	$15,000

Materials and labor are the only variable costs. If production and sales are budgeted to increase to 150 chairs in August, how much is the expected total variable cost on the August budget?

$17,325

$16,950

$18,750

$9,750

Multiple Choice, Question 109

ProGo plans to sell 1,200 carriers next year and has budgeted sales of

$48,000

and profits of

$20

,000.

Variable costs

are projected to be $22 per unit. Nathan Co. offers to pay $

21

,000 to buy 600 units from ProGo. Total fixed costs are $5,000 per year. This offer does not affect ProGo’s other planned operations. The incremental revenues for this situation are

$21,000.

$7,800.

$2 7,000 .

$6,000 .

Multiple Choice, Question 130

Breezes Curacao has 200 rooms. Each room rents at $130 per night and variable costs total $42 per room per night of occupancy.

Fixed costs

total $18,700 per month. If 70% of the rooms are occupied each of the 30 nights in June, how much will total variable costs be for June?

$369,600

$252,000

$546,000

$176,400

Multiple Choice, Question 135

Rose Wilson is entering her senior year as an accounting major and has a number of options for her summer break. Her options for the 3 month break follow:
(1) Work full time at a local accounting firm making $2,200 per month.
(2) Take a summer class which will cost $800 and work half time making $1,100 per month.
(3) Take a class at a cost of $800 and not work at all during the summer.
Rose’s incremental revenue if she chooses option 1 over option 2 would be

$6,600.

$800.

$1,600.

$3,300.

Multiple Choice, Question 141

Serta Carpet, which manufactures carpet, incurred the following costs for March when 2,600 yards of carpet were produced and sold:

 $12,200 for nylon thread used on carpet

 $

16,000

for scotch guard for carpet

 $4,000 for jute backing to reinforce the carpet

 $5,000 for glue to be used in the manufacturing process

 $21,000 for insurance (half for administrative activities, half for production activities)

 $7,000 for production employee’s wages

 $10,000 for rent (60% for the production facility, 40% for the administrative offices)
How much are total variable costs if 2,200 yards of carpet are produced and sold in April?

$37,400

$44,200

$55 ,169

$ 63 ,6 31

Post-Lecture, Question 5

Assume you purchase a ticket to a local football game for next week at a cost of

$50

. Before the day of the game, you are invited to a picnic by your best friend. You would have to bring $20 of hotdogs to the picnic. You could sell the ticket to the game for $55 to a scalping company. What is the sunk cost connected with deciding whether or not to attend the picnic?

$5

$50

$55

$30

	Post-Lecture, Question 6

Juanita is trying to decide whether or not to attend college during the next 12-week session. She has the following options:

1. Attend college full-time at a cost of $1,200.

2. Attend college part-time at a cost of $600 and work part-time earning $1,800.

3. Work full-time earning $4,800.

What is Juanita’s incremental profit if she chooses option 3 over option 2?

	$3,600

$4,800

$6,000

$3,000

Multiple Choice, Question 71

Clearance Depot has total monthly costs of $8,000 when 2,500 units are produced and $12,400 when 5,000 units are produced. What is the estimated total monthly fixed cost?

$3,600

$8,800

$4,400

$6,580

Multiple Choice, Question 74

Total costs were $75,800 when

30,000

units were produced and $95,800 when 40,000 units were produced. Use the high-low method to find the estimated total costs for a production level of 32,000 units.

$80,115

$91,800

$76,000

$79,800

Multiple Choice, Question 79

Stetson University teaches a large range of undergraduate courses. It is interested in determining the cost equation for the facilities cost as a function of student credit hours so that it an more accurately budget its facilities costs as enrollment grows. Information for the high and low cost semesters and volumes for last 5 years appears below

Semester	Student Credit Hours	Facilities Cost
Spring 2007	2 50,000	$500,000
Fall 2004	300,000	$530,000

Using the high low method, with student credit hours as the activity driver, what is the equation for facilities cost (FC) as a function of student credit hours?

FC = $1.77 / student credit hour

FC = $350,000 + $0.60 / student credit hour

FC = $2 / student credit hour

FC = -$585,100 + $ 1.6 7 / student credit hour

Multiple Choice, Question 110

Circle K Furniture has a contribution margin ratio of 16%. If fixed costs are $176,800, how many dollars of revenue must the company generate in order to reach the break-even point?

$1060,800

$208,476

$282,880

$1,105,000

Multiple Choice, Question 117

Marshal Corporation sells a single product at a price of $62 per unit. Fixed costs total $640,000 and variable costs per unit are $22. Marshal is considering the purchase of new equipment which would reduce variable costs per unit to $16, but fixed costs would increase to $820,000. Above what volume would Marshal be better off with the new machine?

30,000

16,000

17,827

The problem does not provide enough information to answer the question.

Multiple Choice, Question 122

Rambles Toyland makes a product that sells for $70 per unit and has $45 per unit in variable costs. Annual fixed costs are $

24,000

. If Rambles sells 10 units less than breakeven, how much loss would the company recognize on its income statement?

$250

$960

$700

$450

Multiple Choice, Question 132

Berha’s Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10%. Fixed manufacturing costs total $1,250 per month, while fixed selling and administrative costs total $2,500. How many phones must be sold to achieve the breakeven point?

31

63

21

94

Multiple Choice, Question 151

Byters on Call provides computer repairs on-site and has a contribution margin ratio of 32%, a contribution margin per service call of $5, and fixed costs of $21,160 per month. During March, it made 5,000 service calls. How much will Byters on Call’s profit increase if 160 more service calls are made?

$6,771

$800

$4,232

$1,354

ultiple Choice, Question 165

Donto Company produces two models of buckets, Tonto and Pronto. Information regarding these products for May follows:

3,000

	Tonto	Pronto
Number of units	7,000
Sales revenue	$120,000	$140,000
Variable costs	60,000	42,000
Fixed costs	24,000	50,000
Net Income	$36,000	$48,000
Pounds of plastic to produce one bucket	4.0	1.6
Contribution margin per unit	$20	$14

Due to increased demand of plastic in the market, Donto Company can obtain only 9,000 pounds of plastic per month. Donto can sell as many buckets as it can produce of either model. How many of each model should Donto produce to maximize profit in May considering the constraint?

Tonto: 2,250; Pronto: 0

Tonto: 0; Pronto: 4,375

Tonto: 0; Pronto: 5,625

Tonto: 1,125; Pronto: 2,812

Post-Lecture, Question 6

Product A has a contribution margin per unit of $500 and required 2 hours of machine time. Product B has a contribution margin per unit of $1,000 and requires 5 hours of machine time. How much of each product should be produced given there are 100 hours of available machine time?

50 units of A and 25 units of B.

25 units of B.

50 units of A.

None of the above is correct.