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Unformatted text preview: l. ’L . ACC 359 — Chapter 3 doublequiz Name: «[1 rum/e 1/ key
January 24, 2008 Class (circle one): 12:30 or 2:00 Teddy Bear Daycare Teddy Bear Daycare provides daycare for children Mondays through Fridays. Its
monthly variable costs per child are: Lunch and snacks $100
Educational supplies $ 75
Other supplies (paper products, toiletries, etc.) $_2§
Total $200
Monthly ﬁxed costs consist of:
Rent $2,000
Utilities 33 300
Insurance $ 300
Salaries $2,500
Miscellaneous 39 500
Total $5,600 Teddy Bear charges each parent $600 per child per month. Teddy Bear’s tax rate is 25%. + ['2 1. Teddy Bear’s target operating income is $10,400 per month. Compute the
number of children who must be enrolled to achieve the target operating income.
Round to the nearest child — no fraction of children! © «1» 16 2. Teddy Bear lost its lease and had to move to another building. Monthly rent for
the new building is $3,000. At the suggestion of parents, Teddy Bear plans to
take children on ﬁeld trips. Monthly costs of the ﬁeld trips are $1,000. What
should the new monthly fee per child be to meet the target operating income of $10,400 per month, assuming the same number of children as in #1 above?
Round to the nearest dollar. .7F( 600x ~200X 4500') 2 10,700 300): ~L/wo "2 {awe
300x 5: Iii/(500 «751: L/O‘x ~(‘1‘7M’Wl new? = lat/00
[7W Wx ~/7, V00 )C/o, £100
2475K ~ 23,0ro 2 N9, we
56,75} 2 13) 750 CutnSew Cutn—Sew is a small company that makes jackets for a readytowear clothes designer at
a selling price of $20. Cut—nSew is considering investing in a new plant. It can either
invest in a moremanual plant or a moreautomated plant. Both types of plants will have
the same level of quality. The manual plant will have ﬁxed costs of $20,000 per year,
and a variable cost of $10 per jacket. The automated plant will have ﬁxed costs of
$30,000 per year, and a variable cost of $8 per jacket. Ignore income taxes. +7 1.
t7 2.
ﬂ 3' +174.
+6 5 What is the breakeven point in units for the manual plant? What is the breakeven point in units for the automated plant? At what level of unit sales will the two types of plants have the same operating
income? What range of unit sales will Cutn—Sew prefer the manual plant? What range of unit sales will CutnSew prefer the automated plant? is 10x  wx ~7/O/000 ":0 lax : "LO/000 2.1M — 87x ~ 30,000 :0 llx 2 30,000
X 7 ”L310 3, 20x ~/0x VZQOOO : 10x Vgx ~3Q000 10x~1qooo : fix ’370,000 {0,000 7 2X Ll, [7,797 6mg, hut/er Si :00! OM higher. The Ronowski Company The Ronowski Company has three product lines of belts (A, B, and C) with contribution
margins of $3, $2, and $1 respectively. The president foresees sales of 200,000 units in
the coming period, consisting of 20,000 units of A, 100,000 units of B, and 80,000 units
of C. The company’s ﬁxed costs for the period are $255,000. {L ll 1. What is the company’s breakeven point in units, assuming that the given sales
mix is maintained? Ignore income taxes.
A, (9 2. If the sales mix is maintained, what is the total contribution margin when 200,000
units are sold? What is the operating income? Ignore income taxes.
H l 3. What would be the breakeven point in units if the sales mix changed to 20,000
units of A, 80,000 units of B, and 100,000 units of C? Ignore income taxes.
’t/ (I 4. What would be the breakeven point in units if the sales mix changed to 20,000
units of A, 80,000 units of B, and 100,000 units of C? Assume a 20% tax rate. I. 1th) + 10m) +800 ~2rrm :0 0X” "V 10X tgx :Z§$,00(>
3hr :. 2531000 x; 7,700 x2, : [$000 unilr 075 A 7,?00 X M) :73000 MIA/tr 070 ﬂ Six : 25$,0063
X‘ : 7,9627? x1
x E; 13938) Lin/tr 070 ﬂ
53,750 WM? 07a [’9
"n 6887 M” 075 C H \\ i. ...
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