Q1)

During the last fiscal year, MLX Inc had revenues and expenses of $250,000 and $150,000 respectively on sales of 10,000 units. The company had net operating assets of $200,000. The company's required rate of return for approval of projects is 20%. MLX's total fixed costs were $60,000. The company's expenses included $30,000 of selling, general and administrative expenses, $15,000 of were variable. The company has a practical production capacity of 20,000 units. Calculate the company's mark-up percentage on absorption cost if the company expects to sell 15,000 units during the next fiscal year.

Multiple Choice

• 46.67%

• 49.12%

• 20%

• 40%

Q2)

For decision-making purposes, factory depreciation costs on existing machinery are relevant.

True or False

Q3)

A dairy producer can produce 100,000 kilograms of plain yogurt at a total variable production cost of $100,000. This plain yogurt has a sales value of $120,000. Alternatively, it can add fruit and other ingredients to this batch of yogurt which would cost an additional $12,000 and sell the batch for $150,000. What would be the effect of adding fruit and other ingredients to the yogurt?

Multiple Choice

• The company's profit would decrease by $20,000.

• The company's profit would decrease by $10,000.

• The company's profit would increase by $18,000.

• The company's profit would increase by $10,000.

Q4)

ABCD Inc. produces 4 products. Information pertaining to each of these products is shown below:

Product	A	B	C	D
Selling Price	$20	$18	$12	$18
Variable Cost	$12	$ 6	$9	$8
Contribution Margin	$8	$12	$3	$10
Machine Hours req/unit:	2.5	3	1.5	4

ABCD's machine hours are a constrained resource. Assuming that the company could sell as much of each product as it produces, in which order would the company produce and sell each of its products to maximize profits?

Multiple Choice

• A,B,C,D.

• B,A,D,C.

• C,B,A,D.

• A,B,D,C.