ANSWER EIGHT QUESTIONS ONLY: (7.5 Mark for each Question)
Question One:
Gaza Company is studying a project that would have an eight
years life and require a $2,400,000 investment in equipment. At the end of eight
years, the project would terminate and the equipment would have no salvage
value. The project would provide net operating income each year as follows:
Sales
...............................
.........
$3,000,000
Less variable expenses …
………
1,800,000
Contribution margin
1,200,000
Less fixed expenses:
Advertising, salaries, and other
fixed outofpocket costs
.............
$700,000
Depreciation
...............................
300,000
Total fixed expenses
....................
1,000,000
Net operating income
..................
$200,000
The company's discount rate is 12%
Required:
1
Compute the project's net present value. Is the project acceptable.
2
Find the project's internal rate of return to the nearest whole percent.
3
Compute the project's payback period.
4
Compute the project's accounting rate of return.
Question Two :
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 $0.75 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.
Required:
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 break
even point in pints.
3
Suppose only raspberries are produced and sold. Compute the break
even point in pints.
Page
1
of
7
نمحرلا هللا مسب
ميحرلا
Prof. Salem A
Helles
Advanced Managerial Accounting
Accounting Department
Faculty of Commerce
Final Exam
Date:30 Jan. 2010
Master of Business Administration
Master of Accounting and Finance
: يعماجلا مقرلا
: بلاطلا مسا
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Question Three
: LG Products markets two computer games: A and B. A contribution
format income statement for a recent month for the two games appears below
:
A
B
Total
Sales
$30,000
$70,000
$100,000
Less variable expenses
20,000
50,000
70,000
Contribution margin
$10,000
$20,000
30,000
Less fixed expenses
24,000
Net operating income
$6,000
Required
:
1
.
Compute the overall contribution margin (CM) ratio for the company
.
2
.
Compute the overall breakeven point for the company in sales dollars
.
3
.
Compute the
break even point for each computer games in sales dollars
.
Question Four
: FG Company makes two products, P1 and
P2.
Data regarding
the two products follow
:
Direct
Labor
Hours per
Unit
Annual
Production
P1
0.80
10,000 units
P2
0.40
40,000 units
Additional information about the company follows
:
a. P1 require $32 in direct materials per unit, and P2 require $18
.
b. The direct labor wage rate is $15 per hour
.
c. P1 are more complex to manufacture than P2 and they require special equipment
.
This is the end of the preview.
Sign up
to
access the rest of the document.
 Spring '10
 SalemH.
 Net Present Value, ... ..., Office Products Division

Click to edit the document details