1.Laurent Industries is attempting to calculate the number of units they would have to sell of their product to reach a target level of operating income for the upcoming month. Which formula would you recommend that they use to make this calculation?

	A.	(Fixed costs + target profit) / contribution margin ratio.
	B.	Fixed costs / contribution margin ratio.
	C.	Fixed costs / contribution margin per unit.
	D.	Fixed costs + (target profit / contribution margin per unit).
	E.	(Fixed costs + target profit) / contribution margin per unit.

2. You are hired as a manager at Seiko Inc. and put in charge of their newest watch, the Grand Seiko. Your managerial accountant is attempting to prove that youre too young to have such a prestigious position. During a meeting with the Board of Directors, she pulls out a cost-volume-profit graph and states, I bet you couldnt even point out where the breakeven point is. Where on the graph would you point?

	A.	Where the contribution margin per unit line crosses the fixed expense line.
	B.	Where the sales revenue line crosses the total expense line.
	C.	Where the variable expense line meets the operating profit line.
	D.	Where the total expense line crosses the Y axis.
	E.	Where the fixed expenses line crosses the sales revenue line.

3.

Your friend has just been given a management position at a Polo Ralph Lauren store in her hometown. She knows you took ACCT 2550 and wants your advice on how to be a good manager. Specifically, she would like to know what costs she should take into account when making managerial decisions. From the following list, which scenario includes irrelevant costs?

	A.	Switching all the light bulbs in the store to LED would save $300 per year.
	B.	The best salesperson in the store has requested a $2.00 per hour raise.
	C.	Freight costs could be reduced by 7% if an alternative distribution centre is used.
	D.	Last year, the store spent $1,400 to upgrade older cash registers.
	E.	Chinos have a contribution margin of $22, jeans have a contribution margin of $25.

4.

Marty works for a company that produces smartwatches. The latest model is called the GEN5 and Marty has been tasked with setting the price for it. From the following list, which criteria should Marty NOT consider when setting the price?

	A.	The target profit for the GEN5 product line.
	B.	How much customers would be willing to pay for each GEN5 smartwatch.
	C.	The capability of the company to meet throughput demands for the product.
	D.	Whether the product is a price-setter or a price-taker.
	E.	All of the above are considerations Marty should make.

5.

TAGHeuer is a luxury watch maker that relies heavily on a participatory budgeting process to plan for future accounting periods. Which of the following would NOT be considered a benefit for TAGHeuer when using participatory budgeting?

		Managers can intentionally build slack into their budgets for their area of operation, ensuring budget compliance.
		The budget provides a benchmark for comparing estimated with actual results for evaluating manager performance.
		The budget will better motivate employees to achieve sales growth and cost reduction goals.
		Lower-level managers have detailed knowledge that helps create realistic budgets.
		All of the above are benefits of using a participatory budgeting process at TAGHeuer.