Question:
Question 1: A company believes it can sell 1,000,000 units of its proposed new can opener at a price of $14.00 each. If the company desires to build a profit $3,000,000 on the can opener, what is the target cost per can opener?
A $14.00
B $11.00
C $8.00
D $17.00
Question 2: One customer orders $20,000,000 worth of product every year by making 50 electronic orders. The direct cost of these orders is $16,000,000. The customer orders an average of 20 separate items on each order (1,000 items for the year) and has ordered a net of 5,000,000 items through the year, and returns nothing. Using activity based methods, Evaluate the profit from this customer?
A $4,000,000
B $3,846,900
C $2,950,000
D $0
Question 3: You've just won a lottery and will get $60,000 per year over the next 20 years. If you feel that 10% is an appropriate rate of return, what is the present value of your winnings?
A $1,200,000
B $510,816
C $251,550
D $178,320
Question 4: Peirzynski Manufacturing Corporation produces a single product, the Utility Knife. Budgeted amounts for the coming year are as given:
Revenues (20,000 units at $12 each) $240,000
Direct material 40,000
Direct labor 70,000
Variable manufacturing overhead 50,000
Fixed manufacturing overhead 30,000
Net income $50,000
Question 5: Podsednik Company has provided to purchase 1,500 units of a special edition of the utility knife from Peirzynski at a price of $11.50 per unit. This special edition will have additional variable costs of $0.25 per unit. Peirzynski has the capacity to produce this order and it will not affect any of their other operations.
What is the incremental cost of accepting the special order?
A $12,000
B $14,250
C $14,625
D $12,375
Question:6 The BigByte Company has 12 outdated computers that are carried in inventory at a cost of $13,200. If these computers are upgraded at a cost of $7,500, they would be sold for $15,300. Alternatively, the calculators would be sold "as is" for $9,000. What is the total advantage or disadvantage of re-working the computers?
A $6,300 advantage
B $1,200 disadvantage
C $5,400 disadvantage
D $3,000 advantage