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financial management and review




MGMT640 Final Exam 9044 Fall 2014.docx Download Attachment;MGMT640 Section 9044;Final Exam;Fall 2014;Name;Date;The Final Exam is individual work. All work on the exam should be from your own efforts, with;no assistance from classmates, family, friends or others. By proceeding with this exam, you are;agreeing not to share the exam content or your responses with anyone, including future students;of MGMT640. Your completed exam is due by 7:00 PM on Sunday, November 30, 2014;(upload to your Final Exam folder under Assignments).;Please refer to the Syllabus for the policy regarding late submissions. There will be no;make-up exams except for documented emergencies.;You are not required to submit your working. However, complete working showing;formulas and calculations may be considered for partial credit for incorrect answers.;Identify the letter of the choice that best completes the statement or answers the question.;1. Mary Thanes, a college student is contemplating the following options for her 3-month;summer break;(1) Take a summer course which will cost $700 and work half-time making $1,000 per;month.;(2) Work full time at the local dinner making $2,000 per month.;(3) Take the summer class at a cost of $700 and not work during the summer.;Which of the following is incorrect?;A);B);C);D);Marys incremental profit/loss if she chooses;option 1 over option 2 would be;-$3,700.;Marys incremental profit/loss if she chooses;option 1 over option 3 would be $3,000.;Marys incremental profit/loss if she chooses;option 2 over option 3 would be $6,000.;Marys incremental profit/loss if she chooses;option 3 over option 2 would be;-$6,700.;2. The opportunity cost of making a product when the manufacturing plant has excess;capacity for which there is no alternative use is;A);Zero.;B);The fixed manufacturing cost of the product.;C);The variable manufacturing cost of the;product.;1;D);A);B);C);D);The total manufacturing cost of the product.;3. Tynex, Inc., a manufacturing company produces 80,000 units of product A at a total cost;of $2.4 million. Total fixed costs are $1.4 million. If the company increases production;by 25% and uses a 19% markup, the price per unit will be;$51.80;$37.10;$30.80;$31.54;Use the following to answer questions 4-5;XTZ Company's market for the Model 55 has changed significantly, and XTZ has had to drop;the price per unit from $265 to $125. There are some units in the work in process inventory that;have costs of $150 per unit associated with them. XTZ could sell these units in their current;state for $100 each. It will cost XTZ $10 per unit to complete these units so that they can be sold;for $125 each.;A);B);C);D);A);B);C);D);4. A new employee looks at the analysis and exclaims, We'll lose money with either of;these alternatives! Let's just throw these units in the trash! Suppose the alternative to;trashing is choosing the more profitable of the two alternatives (that the new employee;looked at and did not like). What effect will the trashing option (that the new employee;wants) have on net income?;Net income will increase by $35 per unit for;each unit discarded.;Net income will decrease by $115 per unit for;each unit discarded.;It will have no effect on net income.;Net income will decrease by $100 per unit for;each unit discarded.;5. When the incremental revenues and expenses are analyzed, the company is better off by;$15 per unit if they complete the units.;$25 per unit if they sell the units in their;current state.;$10 per unit if they sell the units in their;current state.;$125 per unit if they complete the units.;6. A company using activity based pricing marks up the direct cost of goods by 40% plus;charges customers for indirect costs based on the activities utilized by the customer.;Indirect costs are charged as follows: $6.00 per order placed, $3.00 per separate item;ordered, $28.00 per return. A customer places 10 orders with a total direct cost of;$2,000, orders 300 separate items, and makes 5 returns. What will the customer be;2;charged?;A);B);C);D);A);B);C);D);$3,000;$3,900;$5,330;$5,750;7. Manufacturing overhead is allocated to products based on the number of machine hours;required. In a year when 20,000 machine hours were anticipated, costs were budgeted;at $125,000. If a product requires 8,000 machine hours, how much manufacturing;overhead will be allocated to this product?;$41,667;$43,750;$1,120;$50,000;Use the following information to answer questions 8-9;The Sunrise Hotel has 200 rooms. Each room rents at $110 per night and variable costs total $27;per room per night of occupancy. Fixed costs total $76,000 per month.;A);B);C);D);8. If the hotel spends an additional $20,000 in the month of February on advertising they;feel that they can expect occupancy rate to increase by 10%. What would be the;financial impact of spending this additional money on advertising for the month of;February (28 days)?;Total fixed costs will increase by $10,500.;Net income will increase by $16,320.;Net income will increase by $26,480.;Total fixed costs will remain the same.;A);B);C);D);9. If 75% of the rooms are occupied each night in the month of February (28 days) what;will total costs be for the month?;$189,400;$173,600.;$197,400;$155,680.;10. Bayonet Inc. has provided the following data from its activity-based costing system;Activity Cost Pools;Designing products;Setting up batches;Assembling products;Total Cost;$387,539;$45,389;$27,345;Total Activity;6,512 product design hours;786 batch set-ups;4,081 assembly hours;The activity rate for the designing products activity cost pool is;3;A);B);C);D);$387,539 per design hour.;$40.45 per design hour.;$70.68 per design hour.;$59.51 per design hour.;11.;Jones Company manufactures widgets. Old;Ham Company has approached Jones with a;proposal to sell the company one of the;components used to make widgets at a price of;$100,000 for 50,000 units. Jones is currently;making these components in its own factory.;The following costs are associated with this;part of the process when 50,000 units are;produced;Direct material;Direct labor;Manufacturing overhead;Total;A);B);C);D);The manufacturing overhead consists of;$32,000 of costs that will be eliminated if the;components are no longer produced by Jones.;The remaining manufacturing overhead will;continue whether or not Jones makes the;components.;What is the amount of avoidable costs if Jones;buys rather than makes the components?;$60,000;$96,000;$124,000;$100,000;12. New Insights, Inc. is looking to achieve a net income of 15 percent of sales. Heres the;firms profile: Unit sales price is $10, variable cost per unit is $6, total fixed costs are;$40,000. What is the level of sales in units required to achieve a net income of 15;percent of sales?;A);12,000 units;B);21,000 units;C);16,000 units;D);20,000 units;13. At Joshuas Apparel, the break-even point is 2,400 units. If fixed costs total $300,000;and variable costs are $25 per unit, what is the selling price per unit?;4;A);B);C);D);$210;$180;$5;$150;C);D);14. Which of the following situations will most likely violate cost-volume-profit;assumptions about fixed costs?;When production volume increases beyond the capacity of the plant, a second shift;will be added instead of building a new plant.;The companys raw material supplier typically allows volume discounts when;larger amounts of the raw material are purchased.;Fixed costs per unit decrease as volume increases.;As volume increases, per unit fixed manufacturing overhead remain constant.;A);B);C);D);15. Mars, Inc. owns material that originally cost $50,000. It can be sold as is for;$24,600 but if processed at a cost of $3,200, it can be sold for $26,000. The;incremental effect on the companys overall profit of processing and selling the;material instead of selling it as is would be;$22,800;-$1,800;-$3,200;-$7,600;A);B);16. Western Apparel Company owns two stores;and management is considering eliminating the;East store due to declining sales. Segmented;contribution income statements are as follows;and common fixed costs are allocated on the;basis of sales.;West;Sales;$525,000;Variable costs;262,500;Direct fixed costs;62,500;Segment margin;200,000;Allocated fixed costs;137,500;Net Income;$62,500;A);B);C);D);5;Western feels that if they eliminate the East;store that sales in the West store will decline by;25%. If they close the East store, overall;company net income will;decline by $90,000.;decline by $62,000.;decline by $85,625.;decline by $20,000.;17. A retailer purchased some trendy clothes that have gone out of style and must be marked;down 20% of the original selling price to be sold. Which of the following is a sunk cost;in this situation?;A);The original selling price.;B);The original purchase price.;C);The anticipated profit.;D);The current selling price.;18. Target believes it can sell 3,500,000 of a new vehicle charger for $8 each. There will be;$3,000,000 in fixed costs associated with the charger. If the company desires to make a;profit of $2,000,000 on the charger, what is the target variable cost per charger?;A);$7.25;B);$9.00;C);$6.57;D);$9.40;Information for Questions 19;Anderson Manufacturing makes a single product. Budget information regarding the current;period is given below;Revenue (100,000 units at $8.00);Direct materials;Direct labor;Variable manufacturing overhead;Fixed manufacturing overhead;Net income;$800,000;150,000;125,000;235,000;110,000;$180,000;Dye Company approaches Anderson with a special order for 15,000 units at a price of $7.50 per;unit. Variable costs will be the same as the current production and accepting the special order;will not have any impact on the rest of the company's orders. However, Anderson is operating at;capacity and will incur an additional $50,000 in fixed manufacturing overhead if the order is;accepted.;A);B);C);D);19. What is the incremental income (loss) associated with accepting the special order?;($14,000);$36,000;($23,500);$27,000;20. Kawasaki sells motorcycles Ninja ZX-6R and Ninja ZX-14R. The Ninja ZX-6R sells;for $10,000, has variable cost (labor and material) of $2,000, and requires 10 hours of;6;use of machinery to produce. The Ninja ZX-14R sells for $12,000, has variable costs;(labor and material) of $8,000, and requires 2 hours of use of machinery to produce.;Kawasaki has excess capacity of 5,000 hours of use of machinery. Which motorcycle;should it produce?;A);B);C);D);The Ninja ZX-6R because it has a higher;contribution margin of $8,000.;The Ninja ZX-14R because it has a higher;contribution margin per hour of machinery use;of $2,000.;The Ninja ZX-6R because it has a higher;contribution margin per hour of machinery use;of $4,000.;The Ninja ZX-14R because it has a higher;contribution margin of $4,000.;21. Which of the following statements about prices and profit is true?;A);Higher prices always lead to higher profits.;B);Higher prices always lead to lower demand;and lower profits.;C);Higher prices combine with lower quantity;demanded to change the level of profits.;D);Higher prices will be offset by lower demand;so profits will stay constant.;A);B);C);D);22 Paul's Pizza produced and sold 2,000 pizzas last month and had fixed costs of $6,000. If;production and sales are expected to increase by 10% next month, which of the;following statements is true?;Total fixed costs will decrease.;Fixed cost per unit will decrease.;Total fixed costs will increase.;Fixed cost per unit will increase.;23. The Dynamics Company uses cost-plus pricing with a 50% mark-up. The company is;currently selling 100,000 units at $12 per unit. Each unit has a variable cost of $6. In;addition, the company incurs $200,000 in fixed costs annually. If demand falls to;80,000 units and the company wants to continue to earn a 50% return, what price should;the company charge?;A);$13.50;B);$14.55;C);$12.75;D);$10.95;7;Use the following to answer question 24;Taylor's Treasures has collected the following information over the last six months.;Month;March;April;May;June;July;August;Units produced;10,000;12,000;18,000;13,000;12,000;15,000;Total costs;$25,600;26,200;27,600;26,450;26,000;26,500;24. Using the high-low method, what is the variable cost per unit?;A);$0.25;B);$2.56;C);$0.22;D);$2.00;25. During 2013, Teko, Inc. reported revenues of $891,640 and profits of $91,486. Fixed;costs were $332,043 and 44,582 units were sold. If costs and prices are expected to stay;the same in 2012, and Bonzai expects to sell 45,000 units, what will be the companys;budgeted profit?;A);$95,457;B);$124,388;C);$132,414;D);$152,177;8;View Full Attachment;Additional Requirements;Min Pages: 7;Level of Detail: Only answer needed


Paper#17926 | Written in 18-Jul-2015

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