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# Exam04 - (Utlfl 800Z ~updS Use the following to answer...

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800Z~updS (Utlfl

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Use the following to answer questions 1-2: 000 0~oO ~ 4, ~co /5(0 00 3,,5D >,OOC1 Cr LfOO l} '6 00 ------- \$8,250 \$15,000 \$11,250 \$3,450 A) \$11,550 ~ \$7,800 tY \$4,800 D) \$3,750 A) B) ~ 1. What is the budgeted total fixed cost? 2. What is Sam's budgeted profit? Sam's Chop has budgeted the following costs for a month in which 1,500 steak dinners will be produced and sold: Materials, \$3,750; labor (variable), \$3,000; rent (fixed), \$2,400; straight-line depreciation, \$600; and other costs that don't change when the number of dinner sold changes, \$1,800. Sam sells the steak dinners for \$10.00 each. -t G (000 (000 />0 ffr OOO :: fu ~h;+ Vl\r,-obll-- = -15800,OOO-~3(J°looO =45:1 Incremental profit will increase by \$40,000. Incremental profit will decrease by \$120,000. C) Incremental profit will decrease by \$80,000. D) Incremental profit will decrease by \$60,000. 3. Banana Company has been offered \$600,000 to produce 40,000 units for a special customer. Banana has budgeted sales of 300,000 units and \$6,000,000 with fixed costs of \$300,000 and total costs of \$5,400,000. Assuming that Banana has the capacity to produce the additional units and that accepting this order will not affect any other orders, what effect will accepting the order have on Banana's profit? f 600( rxJo/ YOrODQ ::; ~I S /uhi ~L1r(iH\ t rt1fit::: *(00, O(J t'01 / <,'/0,6(1 :: t ).1(1) V~I -----:----:---- ~ 5et 0 ( dt1 0 -- t~·TT Page 2
Use the following to answer question 4: A company which manufactures 3 types of automobiles (standard, mid-class, and luxury) incurred the following costs for March: \$18,000 for production materials used o~ cars such as tires and glass. \$14,000 for leather used exclusivelx: on the lux!:!£Y line of cars. \$2,000 for tire rims to be used~xclusivelx: on the.mid-class line of cars. \$3,000 for glue to be used in the manufacturing process for...all..cars. \$14,000 for insurance (half for administrative activities, half for production activities). \$9,000 for production employee's wages who work on all three lines of cars. \$8,000 for rent (75% for the production facility, 25% for the administrative offices). 4. Direct costs to the luxury line of cars total: ~ \$45,000. ~ \$14,000. C) \$32,000. D) \$35,000. 5. When the level of activity increases, the fixed cost per unit ~ D) decreases. remains the same. mcreases. fluctuates, depending on the amount of the increase in activity. \$2.50 \$2.20 \$2.00 \$0.50 A) ~ 6. Kari's Kookies has total costs .of \$5,000 when 2,000 units are produced and \$11,000 when 5,000 units are produced. What is the variable cost per unit? ~~OOO /-V oo ~ ~~. SO ~ \ \ ( ona /9J O O:::- 4Z:JD LlOOO- SOOO - ~ =- -fG 5006 - <.-000 - >bM 7. Tom's Tidbits has total costs of\$7,000 when 3,500 units are produced and \$10,500 when 7,000 units are produced. ~ \$7,000 B) \$3,500 C) \$10,500 D) \$0 What is the total fixed cost? {t5[SOO-lOOO __ ~~ ~ 7pOO -3{5 60 - 3/500 Page 3

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8. Total costs were \$75,800 when 30,000 units were produced and \$95,800 when 40,000 units were produced. Use the high-low method to find the estimated total costs for a production level of 32,000 units. ) h ''2/ -.L 1:'7 5 ~oo 50 000 ::: 1 L-./.7 Vl\\\ A) \$80,115 I ~06 f ( (I I !-- / ~ \$76,000 S, t> .:r'r5;V(JO 7 0 r OOO =; -fL- l{O/ot)it \$79,800 -. ) \$91,800 -ff-Y-I-g 0-0 --"'T""l{dl'"'-( O-IO .... ---~- ~/o hI t:J 90,170 units ~. 221,250 units C) 304,536 units D) 86,325 units 9. Assume that Briscoe's Bagels has fixed costs of\$128,325. Each unit generates variable costs of \$0.42 and sells for \$1.00. What is the break-even point?
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