1. Summit Products, Incorporated is interested in producing and selling an improved widget. Market research indicates that customers would be willing to pay $72 for such a widget and that 32,000 units could be sold each year at this price. The current cost to produce the widget is estimated to be $50. Summit has learned that a competitor plans to introduce a similar widget at a price of $62. In response, Summit may reduce its selling price to $62. If Summit requires a 15% return on sales, what is the target cost for the new widget?

• $9.30

• $62.00

• $10.80

• $52.70

2. If 7,500 units were in beginning inventory, 33,000 units were started, and 8,000 units were in the ending inventory, how many units were transferred out?

• 33,000 units

• 48,500 units

• 32,500 units

• 33,500 units

3. The Abrams Corporation incurred the following quality costs during the year:

Inspections	$ 32,200
Training	$ 15,100
Quality planning	$ 7,000
Maintenance	$ 6,000
Rework	$ 3,050
Warranty	$ 7,570
Testing of equipment	$ 6,400
Scrap	$ 8,000
Lost sales	$ 15,000
Downtime	$ 8,800
Repairs	$ 5,600

What are the total prevention costs for the Abrams Corporation?

• $28,100

• $28,170

• $38,600

• $19,850