T1_Solution - 6A:130 Fall 2007 Test 1 1 of 11 Test 1 6A:130...

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6A:130 Fall 2007 – Test 1 1 of 11 Test 1 6A:130 Accounting for Management Analysis and Control Fall 2007 Name: ___SOLUTION ______________________________________________ Score: _______ INSTRUCTIONS : 1. This is a closed book, closed note exam. 2. You should write all of your work in this examination booklet (use the back of the previous page if needed). Show your work clearly and neatly, LABEL ALL CALCULATIONS. You can not earn partial credit unless we understand your train of thought. Answers with out supporting work . 3. To my knowledge, you do not need to make any additional assumptions; however, if you make an assumption, clearly state it and your assumptions can not conflict with other information provided. 4. If you do not know an answer, say so and leave the rest of the space blank. Do not fill the page with random thought hoping for partial credit. In grading the exam, we look for logic and sensibility in your answers. Answers that clearly state “I do not know” with out supplementary guesses will receive 25% of the points available for that part of the question 5. WRITE your name on this examination booklet. 6. TIME: There is a 2 hour time limit on this exam. 7. GRADING: This examination has 100 points possible. No partial credit is given for the multiple- choice questions, but partial credit will be given, when appropriate, on the remainder of the examination. Remember that some problems/questions are worth more than others. 8. CHEATING: If you are caught cheating you will receive a zero on this exam and a “D” (at best) for the course grade. Good Luck! After completing your exam, sign and date the Honor Pledge below. If you cannot truthfully sign the pledge, you must contact your professor or proctor before handing in your exam. On my honor, I pledge that during this examination I neither gave nor received any assistance, and I did not witness any violation of the honor code. _____________________________________________ ___________ Signature Date
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6A:130 Fall 2007 – Test 1 2 of 11 1. Mount Carmel Company sells only two products, Product A and Product B ( 15 points total ). Product A Product B Total Selling price $40 $50 Variable cost per unit $24 $40 Total fixed costs $840,000 Mount Carmel sells two units of Product A for each unit it sells of Product B. Mount Carmel effective tax rate is 30%. Required: a. What is the breakeven point in units for each product assuming the sales mix is 2 units of product A for each unit of Product B (5 points) ? N = breakeven in product B 2N = breakeven in product A ($40 x 2N) + ($50 x N) – ($24 x 2N) – ($40 x N) – $840,000 = 0 ($130 x N) – ($88 x N) – $840,000 = 0 $42N – $840,000 = 0 N = $840,000 / $42 = 20,000 Break even, 40,000 units of Product A and 20,000 units of Product B b. What is the breakeven point if Mount Carmel’s effective tax rate is reduced to 25%, assuming the sales mix is 2 units of Product A for each unit of Product B
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This test prep was uploaded on 04/07/2008 for the course ACCT 130 taught by Professor Hartman during the Fall '07 term at University of Iowa.

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T1_Solution - 6A:130 Fall 2007 Test 1 1 of 11 Test 1 6A:130...

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