ADM2341A Midterm Fall 2008 Sol

ADM2341A Midterm Fall 2008 Sol - Page 1 of 9 ADM 2341...

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Unformatted text preview: Page 1 of 9 ADM 2341 Solution MIDTERM EXAM Fall 2008 Professor Eden Section A Name of the student (printed ): ___________________Student Number: ____________ INSTRUCTIONS 1. Books and notes are not permitted. 2. Calculators are permitted. 3. Language dictionaries are permitted 4. All questions are to be answered in this examination paper. No other paper will be corrected. 5. Do not remove any page from this paper. 6. In order to receive all of the marks which you have earned, Show the calculations that you have made in arriving at your answer (the calculations are an integral part of the grading scheme); 7. Time allotted: 90 minutes Q UESTION Q.1 Q.2 Q.3 Q.4 Q.5 Q.6 Q.7 Total MAX. GRADE __/5 __/5 __/2 __/4 __/10 __/8 __/12 __/46 Statement of Academic Integrity The School of Management does not condone academic fraud, an act by a student that may result in a false academic evaluation of that student or of another student. Without limiting the generality of this definition, academic fraud occurs when a student commits any of the following offences: plagiarism or cheating of any kind, use of books, notes, mathematical tables, dictionaries or other study aid unless an explicit written note to the contrary appears on the exam, to have in his/her possession cameras, radios (radios with head sets), tape recorders, pagers, cell phones, or any other communication device which has not been previously authorized in writing. Statement to be signed by the student: I have read the text on academic integrity and I pledge not to have committed or attempted to commit academic fraud in this examination. Signed:______________________________________ Note: an examination without this signed statement will not be graded and will receive an exam grade of zero. Page 2 of 9 Short answer Questions and Exercises Q.1 ( 5 marks) Zacapa Corporation has the following income statement for the period ending December 31, 2007: Sales $620,000 Less: Variable Expenses 475,000 Contribution Margin 145,000 Less: Fixed Costs 87,000 Income $ 58,000 Required: 1. Using the concept of operating leverage , if Zacapas sales increase by 30%, calculate the new income?. 2. What is the margin of safety in dollars for Zacapa at the current sales level? 1. O/L = CM/NI = 145/58 = 2.5 1 point So if Sales go up by 30%, Income goes up by 30% * 2.5 = 75% 1 point New income = $58,000 + 75%*$58,000 = $58,000 + 43,500 = $101,500 1 point 2. BEP in $s = FC/CM%, CM % = 145/620 = 23.39% BEP$ = $87,000/.2339 = $371,953 1 point MS in Dollars = Current sales BEP in $s $620,000 37`,953 = $248,046 1 point ............................................................................................................................................................
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This note was uploaded on 02/03/2010 for the course ADM ADM2341 taught by Professor Edden during the Winter '09 term at University of Ottawa.

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ADM2341A Midterm Fall 2008 Sol - Page 1 of 9 ADM 2341...

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