Reference no: EM132318325

Question

1.Our company is a price taker and has the following information available for the current year:

budgeted production, 200,000 units;

desired operating income as a percentage of total assets, 15%;

current market price of our product, $50 per unit; and

total assets, $12,000,000.

What is the full product cost for the year?

$1,500,000

$1,800,000

$8,200,000

$12,000,000

2.Our company is a price setter and has the following information available for the current year:

budgeted sales volume, 200,000 units;

desired operating income as a percentage of total assets, 16%;

variable costs, $25 per unit;

fixed costs, $4,000,000; and

total assets, $12,000,000.

What is our sales price per unit if we used the cost-plus pricing approach?

$49.60

$51.91

$54.60

$50.20

3.Our company manufactures and sells calculators for $80 each. A major University has offered us $55 per calculator for a one-time order of 500 calculators.

Our costs to manufacture a calculator include:

direct materials, $25 per unit;

direct labor, $20 per unit;

variable factory overhead, $15 per unit; and

fixed manufacturing overhead, $12 per unit.

Assume that we have excess capacity and the special order will not affect regular sales.

What is the change in operating income that would result from accepting this special sales order?

4.Our company manufactures and sells seven different products to different markets. Financial data for product x2 is as follows:

revenue, $45,000;

variable expenses, $35,000; and

fixed expenses $15,000.

Assume that fixed costs will remain unchanged if the product line is dropped, and there will be no adverse effect on sales of other products. What is the effect of dropping this product on the operating income of the company?

Operating income will increase by $2,000.

Operating income will decrease by $2,000.

Operating income will decrease by $3,000.

Operating income will increase by $3,000.