6A:002
Managerial Accounting
Spring 2009
Midterm 2
SOLUTION
Instructions:
1.
This exam contains 40 questions.
Each question is worth 2 1/2 points.
There are 100 total points on
the exam.
2.
There is no partial credit.
But, in some cases we may look for carrythrough errors.
You should show
your work clearly so that you, and we, can understand the logic of what you are doing.
3.
Round numbers bigger than 1,000 to the nearest whole number.
Round numbers less than or equal
to 1,000 to four decimal places.
4.
Write your answers on the appropriate lines on the answer sheet on the last page of the exam.
5. This is a "closed book, closed notes" exam.
You may NOT use your book, notes, or any other
references during the exam.
6.
You have two hours to complete the exam.
7. This exam has 26 pages including this cover sheet (don’t be alarmed – there’s lots of extra room to
write and several pages of tables).
Check your exam and notify the proctor if pages are missing.
8. The proctor can answer simple questions clarifying the English language.
Other types of questions
will not be answered.
9. Remember  You need only a pencil, eraser, and simple calculator for this exam.
Using or viewing
any other material, including cell phones,
will be considered cheating regardless of the
circumstances
.
In such cases, you will receive 0 points for the exam.
After completing your exam, sign and date the Honor Pledge below.
If you cannot truthfully sign
the pledge, you must contact your professor or a proctor before handing in your exam.
On my honor, I pledge that during this examination I neither gave nor received any assistance.
__________________________
_____________
________________
Signature
Date
ID
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Page 2
Remember:
When necessary, round your answers.
Round numbers bigger than 1,000 to the nearest whole number.
Round numbers less than or equal to 1,000 to four decimal places.
Write your answers on the answer sheet on the front page of the exam question document.
Use the following information about Little Italy to answer questions 1 through 3.
Little Italy Pizzaria estimates its costs as follows:
•
$6,000 per month for building and equipment rental
•
$4 in food cost and direct labor for each pizza that it sells
Selling price for the pizzas averages $7.
In January 2009, Little Italy sold 5,000 pizzas with total
revenue of $35,000.
1. Little Italy expects that its sales will drop in February due to cold weather.
Compute the amount of total cost it
should expect if sales drop to 4,000 pizzas.
Variable cost
4,000 @ $4
$16,000
Fixed cost
6,000
Total cost
$22,000
2. Compute Little Italy’s breakeven point in units.
Breakeven means profit is $0.
So, find the quantity, Q, where
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 Spring '11
 stuff
 ........., gross margin, Kirby Johnson

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