MGMT 640 Final Exam 11211 Spring 2016 - Six questions - Fully solved

1.

Pennfoil Company produces retractable pens.  March budgeted production costs are given below:

In April, Pennfoil expects to produce 90,000 pens.  Assuming no structural changes, what is Pennfoil’s budgeted production cost per pen for April?

A)

$1.62

B)

$1.72

C)

$1.81

D)

$1.89

2.

Use the cost information in (1) above.  In March, the actual direct labor costs were $46,000 and Pennfoil produced and sold 90,000 pens.  The direct labor performance variance (difference) is:

A)

$2,800 unfavorable.

B)

$5,000 unfavorable.

C)

$1,000 unfavorable.

D)

$5,000 favorable.

3.

Remy’s Seafood has budgeted the following costs for a month in which 1,600 seafood dinners will be sold: Materials, $4,080; hourly labor (variable), $5,200; rent (fixed), $1,720; depreciation, $600; and other fixed costs, $550.  Each dinner sells for $12.60.  How much would Remy’s profit increase if 10 more dinners were sold?

A)

$52.

B)

$68.

C)

$72.

D)

$126.

9.

If Sunderland spends an additional $10,000 in the month of February on advertising they feel that they can expect occupancy rate to increase by 10%. What would be the financial impact of spending this additional money on advertising for the month of February (28 days)?

A)

Total fixed costs will increase by $10,500.

B)

Net income will increase by $60,000.

C)

Net income will increase by $26,320.

D)

Total fixed costs will remain the same.

13.

Eibar Inc makes a product that sells for $61 and has $42 per unit in variable costs.  Annual fixed costs are $24,000.  If Eibar sells 10 units less than break-even.  How much loss would the company realize on its income statement?

A)

$275

B)

$260

C)

$190

D)

$240

14.

Fella’s Furniture has a contribution margin ratio of 15%.  If fixed costs are $175,500, how many dollars of revenue must the company generate in order to reach the break-even point? 

A)

$1,111,333

B)

$1,211,333

C)

$1,170,000

D)

$2,111,450