1.1

A company is highly centralized. The Cutting Division, which is operating at capacity, produces a component that it currently sells in a perfectly competitive market for $19 per unit. At the current level of production, the fixed cost of producing this component is $10 per unit and the variable cost is $16 per unit. The Grinding Division would like to purchase this component from the Cutting Division. The price that the Cutting Division should charge the Grinding Division per unit for this component is:

20

24

19

16

1.2

he following information pertains to Artemis Co. for the year ended December 31: (CPA adapted)

Sales $ 856,000 Income $ 107,000 Capital investment $ 749,000

Which of the following equations should be used to compute Artemis' return on investment (ROI)?

• (1/8) (8/7) = ROI
• (7/8) (8/1) = ROI
• (7/8) (1/8) = ROI
• (8/7) (8/1) = ROI

1.3

A company has the following annual budget data:

Beginning finished goods inventory 60,000 units

Sales 90,000 units

Ending finished goods inventory 50,000 units

Direct materials $ 15 per unit

Direct labor $ 25 per unit

Variable factory overhead $ 4 per unit

Selling costs $ 2 per unit

Fixed factory overhead $ 100,000

What are total budgeted production costs for the year? (CIA adapted)