1) Quandary Products has a new product going on the market next year. The following data are...
Question:
1) Quandary Products has a new product going on the market next year. The following data are projections for production and sales:
Variable costs $200,000
Fixed costs $500,000
ROI 15%
Investment $2,500,000
Sales 150,000 units
What is the target selling price per unit?
$2.50
$4.67
$4.90
$7.17
2)At the high level of activity in December, 9,000 machine hours were run and power costs were $19,000. In March, a month of low activity, 2,500 machine hours were run and power costs amounted to $8,500. Using the high-low method, the estimated fixed cost element of power costs is:
$1.62
$14,535
$4,462
$4,037
26)
Delta produces three versions of baseball bats: wood, aluminum, and plastic. A condensed segmented income statement for a recent period follows:
Wood Aluminum Plastic Total
Sales$500,000$200,000$85,000 $785,000
Variable expenses 325,000 140,000 48,000 513,000
Contribution margin175,00060,00037,000 272,000
Fixed expenses 75,000 35,000 42,000 152,000
Net income (loss) $100,000 $25,000 $(5,000) $120,000
Assume 50% of the fixed expenses for the plastic line are avoidable if the Plastic line is dropped. What will be total net income if the plastic line is dropped?
$104,000
$141,000
$114,000
3)Epsilon Remodeling has collected the following data for the next year's budgeted activity:
Carpenter wages$200,000
Fringe benefits$22,500
Related overhead$17,500
Total estimated construction hours 4,500
Desired Profit margin per hour $22
Supply clerk's wages & benefits$22,000
Supply Related overhead$20,000
Profit margin on materials15%
Total estimated material costs$168,000
Based on the above, carpenter hourly charges would be billed at what hourly rate?
Incorrect
Direct Labor:
Carpenter wages $200,000
Fringe benefits $22,500
Related overhead $17,500
Inderect labor:
Supply clerk's wages & benefits $22,000
Supply related overhead $20,000
Direct materials:
Estimated material cost $168,000
Profit margin $25,200
Total cost $475,200
Total estimated construction hours 4,500
Total cost p.h $105,60
Desired profit margin per hour $22
Hourly rate $127,60
4)Zeta Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:
Old Machine New Machine
Price$350,000$685,000
Accumulated Depreciation90,000-0-
Remaining useful life9 years-0-
Useful life-0-9 years
Annual operating costs$225,000$175,000
If the old machine is replaced, it can be sold for $32,000.
Should Zeta keep the old machine or replace it?Why - what is the net savings associated with your choice vs. the alternative?
5)Eta Manufacturing's degree of operating leverage is 1.75. Theta Corporation's degree of operating leverage is 2.5. Theta's earnings would go up (or down) by ________ as much as Eta's with an equal increase (or decrease) in sales.