Question 1:
At the end of 2009, Gilley Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2010, the president of the company wants an assessment of the changes on the company's productivity. The data needed for the assessment are as follows:
2009 2010
Output 30,000 36,000
Output prices $10 $10
Materials (lbs.) 15,000 15,300
Materials unit price $3 $4
Labor (hrs.) 12,000 11,250
Labor rate per hour $5 $5
Power (kwh) 7,500 9,750
Price per kwh $2 $3
How much income was generated in 2009?
a) $300,000
b) $180,000
c) $120,000
b) $213,300
Question 2: Sarah Smith, a sole proprietor, has the following projected figures for next year:
Selling price per unit $150.00
Contribution margin per unit $45.00
Total fixed costs $630,000
What is the break-even point in dollars?
a) $426,000
b) $2,100,000
c) $189,000
d) $900,000