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Homework Quiz

# Homework Quiz - SAMPLE QUIZdue as homework on April 30th...

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SAMPLE QUIZ—due as homework on April 30 th ! CHAPTER 11 1. Pennington Products has two product lines: R-100 and R-200. Revenue and cost information for each of the product lines are as follows: R-100 R-200 Selling price per unit \$45 \$60 Variable costs per unit 15 24 Traceable fixed expenses \$250,000 \$360,000 Pennington has common fixed expenses of \$250,000 per year. Last year, the company produced and sold 30,000 units of R-100 and 20,000 units of R-200. What is the segment margin of the R-100 product line? A. \$650,000 B. \$900,000 C. \$525,000 D. \$400,000 2. Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended: Miniature Golf Arcade Laser Tag Revenues \$225,000 \$500,000 \$300,000 Variable expenses 50,000 100,000 75,000 Traceable fixed expenses 30,000 40,000 35,000 Common fixed costs of \$60,000 are divided equally among the divisions. The segment margin ratio for the laser tag division is: A. 63.33% B. 56.67% C. 75.00% D. 84.44% 3. WSR Inc. sells a variety of drink and food products including potato chips and sodas. The segmented income statements for these two products are as follows: Sodas Chips Sales \$800,000 \$900,000 Variable expenses 200,000 315,000 Contribution margin 600,000 585,000 Traceable fixed expense 120,000 160,000 Segment margin \$480,000 \$425,000 WSR’s management is considering a special advertising campaign that will run during a major sporting event. The advertising campaign is expected to cost \$30,000 and only one product can be featured. In-house marketing studies show that the campaign could increase sales of the soda division by \$200,000 or increase sales of the chips division by \$275,000. What will be the overall net effect on the company’s total profits if the advertising focuses on sodas? A. Increase of \$170,000 B. Increase of \$150,000 C. Increase of \$120,000 D. Increase of \$200,000 4. A company has computed that their “margin” is .18. Which of the following statements is the best interpretation of these results? A. \$.18 of every \$1 invested in assets is net profit.

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B. \$.18 of every \$1 made in sales is profit. C. Every \$1 invested in assets generates \$.18 in sales revenue. D. Every \$1 invested in assets generates \$.18 of segment margin. 5. Hardcastle Ltd. had sales of \$3,000,000 and net operating income of \$800,000. Operating assets during the year averaged \$1,500,000. The manager of Hardcastle is considering the purchase of a new machine which is expected to increase average operating assets by 5%. If the new machine is purchased, the company’s new return on investment (ROI) would be: A. 190.5% B. 52.5%
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Homework Quiz - SAMPLE QUIZdue as homework on April 30th...

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