Question

QUESTION 5

1. Stone Company plans to sell 200,000 calculators. The fixed costs are $600,000, and the variable costs are 60% of the selling price. If the company wants to realize a profit of $120,000, the selling price of each calculator must be:

		$5.00
		$7.50
		$9.00
		$10.00

QUESTION 6

1. Brower Company manufacturers and sells one product for $100 per unit. The variable costs per unit are $70, and the monthly total fixed costs are $3,750. Last month Brower sold 100 units and expects sales to remain the same for the current month. If fixed costs increase by $750, what is the break-even point for the current month?

		$6,400
		$12.500
		$15,000
		$22,500

QUESTION 7

1. The overall purpose of an operating budget is to:

		Develop a plan to meet a specified goal
		Determine disposable income
		Both a and b
		Neither a or b

QUESTION 8

1. The section of a cash budget that identifies amounts that must be borrowed is called the:

		Cash receipts section
		Cash disbursements section
		Cash excess or deficiency
		Financing section

QUESTION 9

1. NewGen Computers is preparing its budget for 2013. Sales for year are budgeted at $1,000,000; 20% are cash sales and 80% are credit sales. The company expects to collect 60% of call credit sales in 2013. Budgeted expenses are $800,000. These expenditures include $25,000 for depreciation and $497,000 for variable manufacturing overhead. Given this information, total cash outflows for 2013 would be:

		$278,000
		$303,000
		$775,000
		$800,000

Answer 1

Question 5

Correct answer--------------$9

Working

Fixed cost	$            600,000
Profit required	$            120,000
Total contribution margin required	$            720,000

.

If variable cost is 60% then Contribution margin will be 40% so we can get calculate sales as (720000/40%)	$ 1,800,000
Units to be sold	200000
Price per unit	$ 9

Question 6

Correct answer--------------$15,000

Working

A	Sale Price per unit	$                 100.00
B	Variable Cost per Unit	$                   70.00
C=A - B	Unit Contribution	$                   30.00
D	Total Fixed cost + Desired Income	$             4,500.00
E=D/C	Breakeven point in units	150
F= E x A	Breakeven in sales dollars	$           15,000.00