1. Muy Bueno Bakery sells its special chocolate cake for $35. The total cost to produce the cake is $26. Of this amount, $4 per unit is selling costs. The total variable cost is $17. The desired profit is $9 per unit. Determine the markup percentage on product cost.

a. 40%.

b. 25%.

c. 59%.

d. 65%.

2. Under the product cost concept, the product cost per unit is calculated as

a. Total product costs/estimated units produced and sold.

b. Total product costs/desired profit + total selling and administrative expenses.

c. Desired profit/total product cost.

d. Estimated units produced and sold/total product cost.

3. Muy Bueno Bakery sells three different products. Currently they are not able to meet all of their customers' demand. Using the following information, determine the most profitable product.

a. Cookies

b. Cake

c. Cake and Pie are the same.

d. Pie

4. Using the following information, determine the factory overhead that will be allocated if the production of the product requires 400 set-ups, 2,000 purchase orders, and 500 quality inspections.

a. $54,000

b. $100,000

c. $37,000

d. $200,000

5. A bottleneck occurs when production is slowed down:

a. Within a process that is not able to meet the amount of production required.

b. Due to a quality issue.

c. All of these choices are correct.

d. Due to a machine breakdown.