Name cid 9 Section BMGT 221 cid 9 Exam Simulation cid 9 Chap 8 MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question hich of the following best describes a relevant cost cid 9 1 C A Costs that were incurred in the past and can not be changed B Cost of developing producing and delivering a product or service Expected future costs that differs among alternatives D A factor that restricts production or sales of a product 2 Clear Sky Sailmakers manufactures sails for sailboats The company has the capacity to cid 9 produce 15 000 sails per year but is currently producing and selling 10 000 sails per year The following information relates to current production 2 cid 9 A Sale price per unit Variable costs per unit Manufacturing Marketing and administrative Total fixed costs Manufacturing Marketing and administrative 250 165 50 750 000 200 000 ZS cid 9 22 000 X to Df 0 0 If a special sales order is accepted for 5 000 sails at a price of 225 per unit and fixed costs remain unchanged how would operating income be affected NOTE Assume regular sales are not affected by the special order ncrease by 50 000 C Increase by 1 125 000 B Decrease by 50 000 D Increase by 150 000 3 Green Pastures golf course is planning for the coming season Investors would like to earn a cid 9 3 cid 9 A 10 return on the company s 40 million of assets The company primarily incurs fixed costs to groom the greens and fairways Fixed costs are projected to be 15 000 000 for the golfing season About 400 000 golfers are expected each year Variable costs are about 20 per golfer The Green Pastures golf course has a favorable reputation in the area and therefore has some control over the price of a round of golf Using a cost plus approach what price should Green Pastures charge for a round of golf LA 67 50 cid 9 B 47 50 cid 9 C 0 17 cid 9 D 61 25 cid 9 TC o O0 OO g cid 9 cid 9 I I cid 9 cid 9 Z 00O 00O cid 9 Z r 4 Green Pastures golf course is planning for the coming season Investors would like to earn a 4 10 return on the company s 40 million of assets The company primarily incurs fixed costs to groom the greens and fairways Fixed costs are projected to be 15 000 000 for the golfing season About 400 000 golfers are expected each year Variable costs are about 20 per golfer The Green Pastures golf course is a price taker and won t be able to charge more than its competitors who charge 75 per round of golf What profit will it earn in terms of dollars A 7 000 000 cid 9 B 15 000 000 cid 9 C 15 000 000 cid 9 D 7 000 00 5 Pottery Unlimited has two product lines cups and pitchers Income statement data for the cid 9 5 most recent year follow Sales revenue Variable expenses cid 9 l3s cid 9 a z 01 co Contribution margin cid 9 cid 9 7c c Fixed expenses cid 9 Operating income lossi i 1 oo Total 460 000 355 000 105 000 76MOI 29 000 Cups 310 000 235 000 75 000 38 000 37 000 Pitchers 150 000 120 000 30 000 38 000 8 0001 Assuming the Pitcher line is dropped mtifixed costs remain unchanged and the space formerly used to produce the line is rented for 45 000 per year how will operating income be affected L A Increase 167 000 C Decrease 15 000 I Increase 44 000 D Increase 15 000 f24Le 6 Kitchen Appliances Company manufactures two products toaster ovens and bread machines 6 The following data are available Sales price Variable costs Toaster Ovensl Bread Machines 200 150 100 30 The company can manufacture three toaster ovens per machine hour and two bread machines per machine hour The company s production capacity is 1 200 machine hours per month What is the contribution margin per machine hour for bread machines A 50 B 700 cid 9 P 100 D 150 too lo V 2 too 2 te cid 9 cid 9 cid 9 7 Compact Appliances uses a standard part in the manufacture of several of its air conditioners cid 9 The cost of producing 40 000 parts is 110 000 which includes fixed costs of 50 000 and variable costs of 60 000 By outsourcing the part the company can avoid 40 of the fixed costs 7 V Id If Compact Appliances buys the part what is the most Compact Appliances can spend per unit so that operating income equals the operating income from making the part A 2 00 B 3 50 C 1 50 D 1 60 J 8 The Schmidt Corporation has in its inventory 4 000 damaged radios that cost 50 000 The cid 9 radios can be sold in their present condition for 32 000 or repaired at a cost of 43 000 and sold for 66 000 What is the opportunity cost of selling the radios in their present condition 8 1 A 75 000 cid 9 B 109 000 C 82 000 cid 9 D 23 000 l3 3 ak sc 1 wv 3 S WVC s to C cid 9 l vt c cid 9 r cid 9 ttiWC 6 r Lt 1r vc 0 Do0 Few cid 9 SD r co0 c a ti 1 o a0D 30 000 cid 9 vo loo tc c oc4 tl a 30 c o r4 p oeo t vr a o 929 3 cid 9 cid 9 cid 9
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