24.Company XYZ produces high-end luxury tables for a niche industry of customers. With its average 20% market share, the company holds an important position in the market. Last year (2020), the company sold 20,000 tables.

It was a relatively positive year, given that for the year to come - 2021 - industry economists predicted a demand of only 80,000 tables for the whole industry - a forecast that managers incorporated into their master- budget for 2021. Industry economists also predicted that overall industry demand would return to its normal level of 160,000 tables in the medium- term.

Managers calculated that in theory, their facility in the Badajoz province could produce 45,000 tables per year. However, once account unavoidable interruptions in activity are taken into account, its capacity is more realistically estimated at 30,000 tables. Fixed costs of 8,500,000 are incurred by the company to sustain the operations of the facility. Save for customized orders, the portion of costs that varies with production is 900 per table, giving the company a typical contribution margin of 600 per table.

With this information in mind, what are the (1) Theoretical capacity; (2) Practical capacity; (3) Master-budget capacity; (4) Normal capacity of Company XYZ?

a) (1) 30,000 tables; (2) 45,000 tables; (3) 20,000 tables; (4) 160,000 tables

b) (1) 45,000 tables; (2) 30,000 tables; (3) 16,000 tables; (4) 32,000 tables

c) (1) 80,000 tables; (2) 30,000 tables; (3) 16,000 tables; (4) 20,000 tables

d) (1) 45,000 tables; (2) 30,000 tables; (3) 32,000 tables; (4) 16,000 tables

25.Refer to question 24. Suppose that managers wanted to calculate the budgeted operating income for 2021. What is the budgeted operating income if Company XYZ only receives regular orders in 2021?

a) 1,100,000

b) 10,700,000

c) 9,600,000

d) None of the above

26.Refer to question 24. What is the breakeven point (in tables) of the Badajoz facility?

a) 20,000 tables

b) 16,000 tables

c) 32,000 tables

d) None of the above

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Final exam - Management Accounting - MACC373062 - Master in Management - Section 4

27.Refer to question 24. What is the margin of safety (in units) in the cost- volume-profit analysis of Company XYZ?

a) 0 tables

b) 4,000 tables

c) 2,000 tables

d) None of the above