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MBA 640 Problems for First Half of Course.pdf - MBA 640...

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MBA 640 Problems for First Half of Course1.The Howell Corporation has the following account balances (in millions):For Specific DateFor Year 2020Direct materials inventory, Jan. 1, 2020$15Purchases of direct materials$325Work-in-process inventory, Jan. 1, 2020$10Direct manufacturing labor$100Finished goods inventory, Jan. 1, 2020$70Depreciationplant and equipment$80Direct materials inventory, Dec. 31, 2020$20Plant supervisory salariesWork-in-process inventory, Dec. 31, 2020$5Miscellaneous plant overheadFinished goods inventory, Dec. 31, 2020$55Revenues$950Marketing, distribution, and customer service costs$240Plant supplies used$10Plant utilities$30Indirect manufacturing labor$60Prepare an income statement and a supporting schedule of cost of goods manufactured for theyear ended December 31,20202.The Doral Company manufactures and sells pens. Currently, 5,000,000 units are sold per year at$0.50 per unit. Fixed costs are $900,000 per year. Variable costs are $0.30 per unit.Consider each case separately:a)i.What is the current annual operating income?ii. What is the present breakeven point in revenues?Compute the new operating income for each of the following changes:b)A $0.04 per unit increase in variable costsc)A 10% increase in fixed costs and a 10% increase in units soldd)A 20% decrease in fixed costs, a 20% decrease in selling price, a 10% decrease invariable cost per unit, and a 40% increase in units sold$5$35.
3.Brooke Motors is a small car dealership. On average it sells a car for $27,000, which it purchasesfrom the manufacturer for $23,000. Each month, Brooke Motors pays $48,200 in rent andutilities and $68,000, for salespeople’s salaries. In addition to theirsalaries, salespeople are paida commission of $600 for each car they sell. Brooke Motors also spends $13,000 each month forlocal advertisements. Its tax rate is 40%.a)How many cars must Brooke Motors sell each month to break even?b)Brooke Motors has a target monthly net income of $51,000. What is its target monthlyoperating income? How many cars must be sold each month to reach the target monthlynet income of $51,000?4.Data 1-2-3 is a top-selling electronic spreadsheet product. Data is about to release version 5.0. Itdivides its customers into two groups: new customers and upgrade customers (those whopreviously purchased Data 1-2-3, 4.0 or earlier versions). Although the same physical product isprovided to each customer group, sizable differences exist in selling prices and variablemarketing costs:New CustomersUpgrade CustomersSelling price$275$100Variable costsManufacturing$35$35Marketing$65$100$15Contribution margin$175$50The fixed costs of Data 1-2-3, 5.0 are $15,000,000. The planned sales mix in units is 60% newcustomers and 40% upgrade customers.a)What is the Data 1-2-3, 5.0 breakeven point in units, assuming that the planned 60%:40%sales mix is attained?b)If the sales mix is attained, what is the operating income when 220,000 total units aresold?$50
5.

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Term
Fall
Professor
DRJOHNNYMORRIS
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