1 Assume that a manufacturing company incurred the following costs Direct labor $ 90,000 Advertising $ 40,000 Factory supervision $ 35,000 Sales commissions $ 15,000 Depreciation, office equipment $ 4,000 Indirect materials $ 5,000 Depreciation, factory building $ 20,000 Administrative office salaries $ 1,000 Utilities, factory $ 2,500 Direct materials $ 105,000 Insurance, factory $ 6,000 Property taxes, factory $ 7,000 If the information above pertains to 1,000 units of production, what is its average manufacturing cost per unit Multiple Choice $268 00 $274 50 $285 50 $270 50 2 A merchandiser plans to sell 15,000 units next month at a selling price of $110 per unit It also gathered the following cost estimates for next month Cost Cost Formula Cost of goods sold $60 per unit sold Advertising expense $150,000 per month Depreciation expense $70,000 per month Shipping expense $100,000 per month $10 per unit sold Administrative salaries $50,000 per month Sales commissions 5 of sales Insurance expense $15,000 per month What is the estimated net operating income for next month Multiple Choice $517,500 $750,000 $162,500 $132,500 3 Assume that a supermarket is considering replacing all of its frozen food freezers The new freezers use less energy to operate than the existing freezers Two costs that have been discussed by various employees with respect to this decision include (1) the utility cost (or energy cost) that would continue to be incurred if the company decides to keep its existing freezers, and (2) the price that would be paid for the new freezers Which of the following choices properly classifies each of these costs as being relevant or irrelevant in the decision to keep or replace the freezers Cost Utility Cost Cost Associated with Keeping the Existing Price That Would be Paid Freezers for the New Freezers Relevant Irrelevant Relevant Irrelevant A) No Yes No Yes B) Yes No No Yes C) Yes No Yes No D) No Yes Yes No Multiple Choice Choice A Choice B Choice C Choice D

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1. Assume that a manufacturing company incurred the following costs: Direct labor $ 90,000 Advertising $ 40,000 Factory supervision $ 35,000 Sales commissions $ 15,000

1. Assume that a manufacturing company incurred the following costs:


Direct labor	$	90,000
Advertising	$	40,000
Factory supervision	$	35,000
Sales commissions	$	15,000
Depreciation, office equipment	$	4,000
Indirect materials	$	5,000
Depreciation, factory building	$	20,000
Administrative office salaries	$	1,000
Utilities, factory	$	2,500
Direct materials	$	105,000
Insurance, factory	$	6,000
Property taxes, factory	$	7,000

If the information above pertains to 1,000 units of production, what is its average manufacturing cost per unit?

Multiple Choice

$268.00
$274.50
$285.50
$270.50

2. A merchandiser plans to sell 15,000 units next month at a selling price of $110 per unit. It also gathered the following cost estimates for next month:

Cost	Cost Formula
Cost of goods sold	$60 per unit sold
Advertising expense	$150,000 per month
Depreciation expense	$70,000 per month
Shipping expense	$100,000 per month + $10 per unit sold
Administrative salaries	$50,000 per month
Sales commissions	5% of sales
Insurance expense	$15,000 per month

What is the estimated net operating income for next month?

Multiple Choice

$517,500
$750,000
$162,500
$132,500

3. Assume that a supermarket is considering replacing all of its frozen food freezers. The new freezers use less energy to operate than the existing freezers. Two costs that have been discussed by various employees with respect to this decision include (1) the utility cost (or energy cost) that would continue to be incurred if the company decides to keep its existing freezers, and (2) the price that would be paid for the new freezers. Which of the following choices properly classifies each of these costs as being relevant or irrelevant in the decision to "keep or replace" the freezers?

	Cost: Utility Cost		Cost:
	Associated with Keeping the Existing		Price That Would be Paid
	Freezers		for the New Freezers
	Relevant	Irrelevant	Relevant	Irrelevant
A)	No	Yes	No	Yes
B)	Yes	No	No	Yes
C)	Yes	No	Yes	No
D)	No	Yes	Yes	No