Exhibit 7-4

The following segmented annual income statement is for Paper Products, Inc.

	Product Lines
	Plain	Lined	Color	Total
Sales revenue	$25,000	$100,000	$125,000	$250,000
Variable costs	15,000	50,000	85,000	150,000
Contribution margin	$10,000	$50,000	$ 40,000	$100,000
Direct fixed costs	4,000	6,000	9,000	19,000
Allocated fixed costs	?	?	?	45,000
Profit (loss)	$ ?	$ ?	$ ?	$ ?

28 Refer to Exhibit 7-4. If allocated fixed costs are based on sales revenue for each product line as a proportion of total sales revenue, what is the amount of allocated fixed costs for Plain?

a. $15,000

b. $6,000

c. $22,500

d. $4,500

e. None of the answer choices is correct.

29. Assume that you invest $10,000 today at an annual rate of five percent for three years. How much will you have at the end of three years (rounded to the nearest dollar)?

a. $11,576

b. $11,500

c. $10,000

d. $11,250

e. None of the answer choices is correct.

30.Assume that you invest $100,000 today at an annual rate of eight percent for four years. How much will you have at the end of four years (rounded to the nearest dollar)?

a. $132,000

b. $124,000

c. $125,971

d. $136,049

e. None of the answer choices is correct.