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Islamic Univ. of Gaza
Advanced Managerial Accounting
Faculty of Commerce
Accounting Department
Prof. Salem Helles
Thursday 22/5/2008
Final Exam
Name: ____________________________________ Std No.______________
Question One:
Gaza Farms produces strawberries and raspberries. Annual fixed costs are $
15,600. The cost driver for variable costs is pints of fruit produced. The variable cost is
$ .75 per pint of strawberries and $ .95 per pint of raspberries. Strawberries sell for $
1.10 per pint, raspberries for $ 1.45 per pint. Two pints of strawberries are produced for
every pint of raspberries.
1 Compute the number of pints of strawberries and the number of pints of raspberries
produced and sold at the breakeven point.
2 Suppose only strawberries are produced and sold. Compute the breakeven point in
pints.
3 Suppose only raspberries are produced and sold. Compute the breakeven point in
pints.
Question Two:
Saed Salem owns and operates a restaurant. Her fixed costs are $ 21,000 per
month. He serves luncheons and dinners. The average total bill (excluding tax and tip)
is $ 19 per customer. Salem's present variable costs average $ 10.60 per meal.
1 How many meals must he serve to attain a profit before taxes costs $ 8,400 per
month?
2 What is the breakeven points in number of meals served per month?
3
Salem's rent and other fixed costs rise to a total of $ 29,925 per month and
variable costs also rise to $ 12.50 per meal. If increases her average price to $ 23,
how many meals must she serve to make $ 8,400 profit per month?
4 Assume the same situation described in number 3. Giraud's accountant tells her
she may lose 10% of her customers if she increases her prices. If this should
happen, what would be Giraud's profit per month? Assume that the restaurant had
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