Question

1. Your internet plan is $45/month for up to 150 GB. Usage above 150 GB will be charged $1 for each additional GB. If you used 400 GB in a month, what was your average cost?

(a) $0.30/GB (b) $0.74/GB (c) $0.82/GB (d) $1.00/GB

2. Engler Corporation manufacturers specialized in blades. Last year, the company manufactured and sold 30,000 blades. It can manufacture up to 10,000 more blades without adding new machinery and equipment (i.e. fixed costs). The total estimated costs for the 30,000 units it made last year are shown in the following table. Suppose the company will manufacture and sell 38,000 blades this year, and they want a 25% profit margin, what should be the unit price? Direct material (variable) $250,000 Direct labor (variable) $375,000 Manufacturing overhead Variable portion $90,000 Fixed portion $75,000 Selling and administrative Variable portion $45,000 Fixed portion $55,000

(a) $38.34 (b) $35.94 (c) $39.56 (d) $37.08 1 3. A personal property asset has a purchase price of $50,000

Above are two multiple choice quextions and answers (a) through (d). please tell me which answer is correct.

Answer 1

(1) Ans	(b)
	Data	Cost
	Upto 150 GB	$                  45
	Additional 1 GB	$                    1
	For 400 GB
	Cost =	$45 + (400-150)* $1
	=	295
	Average Cost/GB =	295/400
		=	0.74	/GB
(2) Ans	(b)
	Particulars	30,000 Units	per unit	38,000 Units
	Variable Costs:
	Direct Material	$       250,000	8.33	$            316,667
	Direct Labour	$       375,000	12.5	$            475,000
	Mfg Overhead	$          90,000	3	$            114,000
	Selling and Admn OH	$          45,000	1.5	$              57,000
	Fixed Costs
	Mfg Overhead	$          75,000		$              75,000
	Selling and Admn OH	$          55,000		$              55,000
	Total Cost	$       890,000		$        1,092,667
	Cost Per Unit			$                28.75
	Profit Margin @ 25%		28.75*25%	$                   7.19
	Sales			$                35.94