Crown Co. can produce two types of lamps, the Enlightner and Foglighter. The data on the two lamp models are as follows:

It takes one machine hour to produce each product. Total fixed costs for the manufacture of both products are $90,000. Demand is high enough for either product to keep the plant operating at maximum capacity.

Assuming that sales mix in terms of dollars remains constant, what is the breakeven point in dollars? (Round intermediate calculations to 4 decimal places and final answer up to the nearest whole number.)

Multiple Choice

• $306,513.

• $118,365.

• $288,735.

• $945,667.

• $244,765.

Brighton Services repairs locomotive engines. It employs 100 full-time workers at $21 per hour. Despite operating at capacity, last year's performance was a great disappointment to the managers. In total, 10 jobs were accepted and completed, incurring the following total costs.

Of the $1,000,000 manufacturing overhead, 30 percent was variable overhead and 70 percent was fixed.

This year, Brighton Services expects to operate at the same activity level as last year, and overhead costs and the wage rate are not expected to change. For the first quarter of this year, Brighton Services completed two jobs and was beginning the third (Job 103). The costs incurred follow.

You are a consultant associated with Lodi Consultants, which Brighton Services has asked for help. Lodi's senior partner has examined Brighton Services's accounts and has decided to divide actual factory overhead by job into fixed and variable portions as follows.

In the first quarter of this year, 30 percent of marketing and administrative cost was variable and 70 percent was fixed. You are told that Jobs 101 and 102 were sold for $920,000 and $572,000, respectively. All over- or underapplied overhead for the quarter is written off to Cost of Goods Sold.

Required:

a. Present in T-accounts the actual manufacturing cost flows for the three jobs in the first quarter of this year.

b. Using last year's overhead costs and direct labor-hours as this year's estimate, calculate predetermined overhead rates per direct labor-hour for variable and fixed overhead.

c. Present in T-accounts the normal manufacturing cost flows for the three jobs in the first quarter of this year. Use the overhead rates derived in requirement (b).

d. Calculate operating profit (loss) for the first quarter of this year under actual and normal costing systems.

Brighton Services repairs locomotive engines. It employs 100 full-time workers at $22 per hour. Despite operating at capacity, last year's performance was a great disappointment to the managers. In total, 10 jobs were accepted and completed, incurring the following total costs.

Of the $1,020,000 manufacturing overhead, 40 percent was variable overhead and 60 percent was fixed.

This year, Brighton Services expects to operate at the same activity level as last year, and overhead costs and the wage rate are not expected to change. For the first quarter of this year, Brighton Services completed two jobs and was beginning the third (Job 103). The costs incurred follow.

You are a consultant associated with Lodi Consultants, which Brighton Services has asked for help. Lodi's senior partner has examined Brighton Services's accounts and has decided to divide actual factory overhead by job into fixed and variable portions as follows.

In the first quarter of this year, 30 percent of marketing and administrative cost was variable and 70 percent was fixed. You are told that Jobs 101 and 102 were sold for $874,000 and $580,000, respectively. All over- or underapplied overhead for the quarter is written off to Cost of Goods Sold.

Required:

a. Present in T-accounts the actual manufacturing cost flows for the three jobs in the first quarter of this year.

b. Using last year's overhead costs and direct labor-hours as this year's estimate, calculate predetermined overhead rates per direct labor-hour for variable and fixed overhead.

c. Present in T-accounts the normal manufacturing cost flows for the three jobs in the first quarter of this year. Use the overhead rates derived in requirement (b).

d. Calculate operating profit (loss) for the first quarter of this year under actual and normal costing systems.

Country A can build 250 tractors and 50 ships if it splits time evenly during a year.

Country B can build 100 tractors and 100 ships if it splits time evenly during the same year.

1. If the term of trade 1ship = 2 tractors, country A wants to have 100 ships how many tractors will it have at the end of the year if it spends 100% of the time to build tractors? Show calculation. (10 points)

A firm has a production function of Q = KL + L, where MPL = K + 1 and MPK = L. The wage rate (W) is $100 per worker and the rental (R) is $100 per unit of capital.

a. In the short run, capital (K) is fixed at 4 and the firm produces 100 units of output. What is the firm's total cost?

b. In the long run, what is the total cost of producing 100 units of output?

1. Determine the following information using absorption costing and variable costing:
Absorption costing
a. Manufacturing cost _______________
b. Per-unit cost _______________
c. Cost of ending inventory _______________

Variable costing
a. Manufacturing cost _______________
b. Per-unit cost _______________
c. Cost of ending inventory _______________

Basic facts:
Direct materials $1,000
Direct labor $2,000
Variable overhead $1,500
Fixed overhead $1,000
Units produced 100
Units sold 80

No beginning inventory

2. What is the prime cost per unit and conversion cost per unit:
a. Prime cost _______________
b. Conversion cost _______________

Basic facts:
Direct material $1,000
Direct labor $500
Overhead $200
Units produced 50

3. Determine the breakeven point for both total sales and units:
a. Sales _______________
b. Units _______________

Basic facts:

Fixed overhead $20,000
Contribution margin 20%
Price per unit $10

4. Calculate the contribution margin to demonstrate the impact of changes in higher leverage and lower leverage product changes:

a. Higher leverage contribution margin
- Lower sales volume _______________
- Higher sales volume _______________

b. Lower leverage contribution margin
- Lower sales volume _______________
- Higher sales volume _______________

Basic facts:
Higher leverage
- Sales $200 and $400
- Variable expense 25%
- Fixed expenses $40

Lower leverage
- Sales $200 and $400
- Variable expense 50%
- Fixed expenses $40

5. Determine the change in contribution margin as a result of a change in sales mix for the following:
a. Base case _______________
b. Favorable mix change ______________
c. Unfavorable mix change _______________

Basic facts:
- Sales price per unit in all three cases $10
- Contribution margin: Product A 20%, Product B 30%, Product C 40% and Product D 50%
- Sales units for base case 25 units for all four products
- Sales units for favorable mix change: Product A 10 units, Product B 20 units, Product C 30 units and Product D 40 units
- Sales units for unfavorable mix change: Product A 40 units, Product B 30 units, Product C 20 units and Product D 10 units

6. Determine cost of goods sold: _______________

Basic facts:
Beginning finished goods inventory $3,000
Ending finished goods inventory $6,000
Direct material $15,000
Direct labor $10,000
Overhead $5,000

7. What is the contribution margin % and gross margin %:
Contribution margin % _____________
Gross margin % ______________

Basis facts:
Sales $80
Direct material $28
Direct labor $12
Overhead $10 indirect and $10 direct
SG&A expense $12 indirect $4 direct

8. Determine the cost and cash impact of keeping or replacing Machine X:
Keep
Cost _____________
Cash ______________

Replace
Cost ____________
Cash _____________

Basic facts:
- Original purchase price for Machine X = $20,000
- Machine X has a 10 year life and straight line depreciation, or $2,000 depreciation per year
- Book value after year 6: $20,000-$12,000=$8,000
- Loss on disposal of machine X $3,000
- Replacement machine: $16,000 acquisition cost
Annual cash operating cost: Machine X $40,000 and Replacement Machine $24,000

9. What is the purchase price variance and material usage variance:
Purchase price variance ______________
Material usage variance ______________

Basic facts:
- 100 pounds
- Standard price $2.00 per pound
- Actual price $1.75 per pound
- Cost $2.00 per pound
- Standard usage 500 pounds
- Actual usage 575 pounds

10. What is the labor rate variance and labor efficiency variance:
Labor rate variance ______________
Labor efficiency variance ______________

Basic facts:
- Standard hours 175
- Actual hours 200
- Standard labor rate $20 per hour
- Actual labor rate $15 per hour

11. What is the spending variance: _______________

Basic facts:
Budgeted expenditures $30,000
Actual expenditures $35,000

12. What is the under applied overhead absorption variance: _______________

Basic data:
Standard units 500
Actual units 400
Standard overhead per unit $10

13. Calculate days DSO, DIOH and DPO on hand based on the following information:
DSO _______________
DIOH _______________
DPO _______________

Basic facts – annual (first year of operation):
- Sales $365,000
- Accounts receivable at year end $60,000
- Cost of sales $182,500
- Inventory at year end $25,000
- Accounts payable at year end $22,500

14. What is the cash conversion cycle based on the data in question 13: _______________

15. If you add 5 days to the DSO, DIOH, and DPO based on the data in question 13 and the standard CCC is as calculated in question 13 what is the CCC $ variance: ______________

16. Name three key success factors related to management control systems and responsibility:
_______________
_______________

_______________

17. Goal congruence is achieved when _____________, working in their own perceived best interest, make decisions that help meet the overall goals of the organization.

18. What are the three types of responsibility centers:
_______________
_______________

_______________

19. How many organizations have implemented ISO 9001 and in how many countries:
Organizations ______________

Countries _______________

20. Delegation of freedom to make decisions is called: _____________

21. In a decentralized organization first-level managers generally have the best information concerning local conditions:
True _______________

False ______________

22. For decentralization to work, autonomy is not necessary:
True ________________
False ________________

23. The most common profitability measures include:
_____________
_____________

_____________

_____________

24. What is the formula for EVA: ____________________________

25. The price that one segment charges another segment of the same organization for a product or service is known as a: _________________

26. What is the formula for a transfer price: __________________________

27. What are two attributes of capital assets:
_______________
_______________

28. CIP is reduced in value when an asset is: ______________

29. When does a depreciation charge start for a fixed asset: ______________

30. What is the benefit of accelerated depreciation: _______________

31. What is the objective of discounted-cash-flow models: ______________

32. What is the net present value: _____________

Basic facts:
- Original investment $10,000
- Useful life 4 years
- Annual income generated from investment (cash inflow) $2,500
- Minimum desired rate of return 10%

- NPV factor by year: 1 .9091, 2 .8264, 3 .7513, and 4 .6830

33. IRR determines the discount rate at which the NPV equals: _______________
_______________

34. Sensitivity analysis shows the __________________________ that would occur if financial projections differ from those expected.

35. What are the three types of cash flows that should be considered when relevant cash flows are arrayed:
_______________
_______________
_______________

36. Cost of capital is the Company’s: _______________________________

37. What is the Company’s cost of capital: ______________

Basic facts:
- Expected equity return 12%
- Cost of debt 6%
- Company’s capital structure 60% equity and 40% debt

38. What is the payback period: _____________

Basic facts:
- $25,000 capital expenditure
- $10,000 annual cash saving or generation

39. What are the four types of typical cost objectives:
_______________
_______________
_______________
_______________

40. What are two popular methods for allocating service costs:
_______________
_______________

41. When are by-product cost identified: ________________

42. How is overhead (based on machine hours) applied to a particular product: ____________________________

43. What is the applied overhead: ____________

Basic facts:
- 100 direct labor hours
- Overhead rate per direct labor hour $5.00

44. _______________ costing includes fixed overhead in the cost of products.

45. _______________ costing excludes fixed overhead from the cost of products.

46. Which of the two costing methods in questions 43 and 44 is based on GAAP requirements: _______________

47. Process costing is used when large numbers of nearly: ____________________________

48. Job-order costing allocates costs to products that are identified by individual: _______________________________

49. Service industries typically use process costing:
True _______________
False _______________

50. Organizations using JIT production systems usually have large inventories:
True _______________
False _______________

1.

Which of the following statements is not true?

2.

Which of the following examples best represents a passive dividend policy?

3.

Suppose a company pays out fully franked dividends of $140 each to investors with marginal tax rates 45%. The statutory company tax rate is 30%. How much tax will each investor pay on his/her franked dividend?

4.

Apple Computer initiated a cash dividend and stock split in 1987 to:

5.

Suppose an individual subject to a 30 per cent marginal rate of income tax has 2,500 shares in a company that is paying a partially franked dividend of 40 cents per share, with a franking ratio of 0.70 (i.e. 70%). The individual is a resident for taxation purposes. If the company tax rate is 30 per cent, the tax credit can the individual claim due to the partially franked dividends is:

6.

A capital loss occurs when:

7.

The buyer of a call option has the choice to exercise, but the writer of the call option has:

8.

Suppose a stock exists with a price of $17, and a put option on the stock exists with an exercise price of $32. What is the approximate minimum value of the put option?

9.

The merger of Westpac Bank and St George bank is an example of ________merger.

10

Mr. Martin buys a put option to sell 100 shares. The strike price=$70; Current stock price=$65, price of the put option to sell one share=$7. At the time of the expiration of the put option, the share price is $72. What is the total gain or loss of Mr. Martin?

You have been assigned to a development team that is building software that will be used to control the operations of a bicycle rental store. A rental store has a limited number of vehicles that can be managed. A bicycle rental store must maintain information about how many vehicles are available for rental. The bicycle rental store must provide publicly available methods to allow vehicles to be added and removed from it. The rental store should also provide publicly available methods that reports its capacity. An attempt to add or remove the vehicle other than it’s capacity should print the message letting user know that he/she can’t add or delete the vehicle (Hint: use “if” condition to check the number of vehicles. They shouldn’t be more that 5/5 each to add and less than 1 to delete). At the moment there are two distinct types of vehicles: bicycle and quadricycle (four-wheel bicycle). Every vehicle has a company code, a fun name, number of wheels and a rental price. The bicycle has two wheels whereas quadricycle has four. Define the Java classes that are required to implement the functionality that is described above. Be sure to use object-oriented principles in your Java code. Hints • Vehicle class, Bicycle class, Quadricycle class, RentalStore class. • Bicycle class and Quadricycle class inherits extends from Vehicle class • RentalStore class will have methods to show the total number of vehicles, add/delete Bicycle and add/delete Quadricycle • Rental class should have ArrayList • In general every class should have attributes, constructor and it’s methods. • Besides RentalStore class, all other classes should have toString() method . • Create TestClass that have Main() method. Bicycles: company code 0001, a fun name ( your choice), number of wheels : 2 and a rental price 150 company code 0002, a fun name ( your choice), number of wheels : 2 and a rental price 110 company code 0003, a fun name ( your choice), number of wheels : 2 and a rental price 50 company code 0004, a fun name ( your choice), number of wheels : 2 and a rental price 250 company code 0005, a fun name ( your choice), number of wheels : 2 and a rental price 90 quadricycle : company code 0011, a fun name ( your choice), number of wheels : 4 and a rental price 250 company code 0012, a fun name ( your choice), number of wheels : 4 and a rental price 110 company code 0013, a fun name ( your choice), number of wheels : 4 and a rental price 210 company code 0014, a fun name ( your choice), number of wheels : 4 and a rental price 210 company code 0015, a fun name ( your choice), number of wheels : 4 and a rental price 190 For this scenario, we will have 5 bicycles and 5 quadricycles (total of 10 vehicles). Add all those vehicles to an ArrayList. Find bicycles with price less than $100 and delete all of them. Find quadricycles with price less than $200 and delete all of them. At last, show to total number of remaining vehicles with their details.

We wish to study the difference in attitudes between urban residents versus suburban residents in a metropolitan area as these attitudes relate to the proposed construction of a nuclear plant in the area. We obtain a random sample of 80 urban residents and find that 60 of these residents favor the construction of the plant. Independently, we obtain a random sample of 100 suburban residents, finding that 65 of these residents favor construction of the plant. Select the correct expression for the margin of error of the 90% confidence interval for p1 − p2, where p1 denotes the population proportion for urban residents and p2 denotes the population proportion for suburban residents.

a) 1.645 ∙ √ .75 80 + .65 100

b) 1.645 ∙ √ (0.75) 2 80 + (0.65) 2 100

c) 1.645 ∙ √ (.75)(.25) 80 + (.65)(.35) 100

d) 1.960 ∙ √ .75 80 + .65 100

e) 1.960 ∙ √ (0.75) 2 80 + (0.65) 2 100

f) 1.960 ∙ √ (.75)(.25) 80 + (.65)(.35) 100