Exam 1 - Practice Problems.pdf

# 7000 units of j and 7000 units of k b 14000 units of

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7,000 units of J and 7,000 units of K (B) 14,000 units of J and 7,000 units of K (C) 10,000 units of J and 5,000 units of K (D) 5,000 units of J and 2,500 units of K (E) 2,500 units of J and 5,000 units of K (F) none of the above 4. Information Inc. sells accounting software. Each unit can be sold for \$100 and has a variable cost of \$30 per unit. Fixed costs are \$10,000. How many units must Information Inc. sell in order to yield an after-tax income of \$2,400. Assume that the tax rate is 40% and taxes are paid on the basis of book income. (A) 200 units (B) 170 units (C) 150 units (D) 145 units (E) only a loss is possible given these data (F) none of the above

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Page 12 Accounting 102, Practice Problems - Exam 1 PROBLEM: Circle the correct answer(s) 1. Kent Co.’s operating percentages were as follows: Revenues Cost of goods sold Variable 50% 100% Fixed 10% 60% Gross margin 40% Other operating expenses Variable 20% Fixed 15% 35% Operating income 5% Kent’s sales totaled \$2 million. At what revenue level would Kent break even? (A) \$1,900,000 (B) \$1,666,667 (C) \$1,250,000 (D) \$833,333 (E) None of the above 2. A company with \$280,000 of fixed costs has the following data: Product A Product B Sales price per unit \$5 \$6 Variable costs per unit \$3 \$5 Assume that three units of A are sold for each unit of B sold. Revenues for product B at the breakeven point will equal: (A) \$200,000 (B) \$240,000 (C) \$600,000 (D) \$840,000 (E) None of the above

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Page 13 Accounting 102, Practice Problems - Exam 1 3. Moorehead Manufacturing Company produces two products for which the following data have been tabulated.
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