3. Prester Corporation has budgeted production for next year as follows:

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1 Student ID: Exam: RR - Tools for Management and Aids to Decision Making When you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If you need to exit before completing the exam, click Cancel Exam. Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer. 1. Data concerning Wythe Corporation's single product appear below: Fixed expenses are $106,000 per month. The company is currently selling 2,000 units per month. The marketing manager would like to cut the selling price by $15 and increase the advertising budget by $5,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 800 units. What should be the overall effect of this change on the company's monthly net operating income? A. increase of $103,000 B. increase of $1,000 C. increase of $31,000 D. decrease of $31, Harrti Corporation has budgeted for the following sales: Sales are collected as follows: 10% in the month of sale; 60% in the month following the sale; and the remaining 30% in the second month following the sale. In Razz's budgeted balance sheet at December 31, at what amount will accounts receivable be shown? A. $214,500 B. $826,500 C. $612,000 D. $680, Prester Corporation has budgeted production for next year as follows:

2 Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 30,000 pounds of material A are on hand to start the year. What would budgeted purchases of material A for the second quarter be? A. 135,000 pounds B. 145,000 pounds C. 140,000 pounds D. 180,000 pounds 4. When using data from a segmented income statement, what are the dollar sales for the company to break-even overall equal to? A. (Non-traceable fixed expenses + Common fixed expenses) Overall CM ratio B. (Traceable fixed expenses) Overall CM ratio C. (Traceable fixed expenses + Common fixed expenses) Overall CM ratio D. (Allocated fixed expenses + Traceable fixed expenses) Overall CM ratio 5. The Adams Corporation, a merchandising firm, has budgeted its activity for November according to the following information: Sales at $450,000, all for cash. Merchandise inventory on October 31 was $200,000. The cash balance November 1 was $18,000. Selling and administrative expenses are budgeted at $60,000 for November and are paid for in cash. Budgeted depreciation for November is $25,000. The planned merchandise inventory on November 30 is $230,000. The cost of goods sold is 70% of the selling price. All purchases are paid for in cash. There is no interest expense or income tax expense. How much are the budgeted cash receipts for November? A. $315,000 B. $475,000 C. $450,000 D. $135, The records of the Dodge Corporation show the following results for the most recent year: Given these data, what was the unit contribution margin? A. $16 B. $2 C. $6 D. $4 7. Malley Corporation has provided the following data concerning its only product:

3 What is the margin of safety in dollars? A. $1,522,050 B. $562,950 C. $2,085,000 D. $1,390, Fab Manufacturing Corporation manufactures and sells stainless steel coffee mugs. Expected mug sales at Fab (in units) for the next 3 months are as follows: Fab likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales. How many mugs should Fab plan on producing during the month of November? A. 34,300 mugs B. 26,800 mugs C. 25,900 mugs D. 23,200 mugs 9. DC Construction has two divisions: Remodeling and New Home Construction. Each division has an onsite supervisor who is paid a salary of $62,000 annually and one salaried estimator who is paid $36,000 annually. The corporate office has two office administrative assistants who are paid salaries of $40,000 and $32,000 annually. The president's salary is $138,000. How much of these salaries are common fixed expenses? A. $210,000 B. $138,000 C. $72,000 D. $258, Tribley Inc. has an operating leverage of 8.0. If the company's sales increase by 19%, its net operating income should increase by about how much? A. 19.0% B. 42.1% C. 8.0% D % 11. Palomo Corporation sells a product for $170 per unit. The product's current sales are 35,200 units and its break-even sales are 25,344 units. What is the margin of safety as a percentage of sales closest to? A. 39% B. 28% C. 61% D. 72%

4 12. Senff Corporation uses the following activity rates from its activity-based costing to assign overhead costs to products: Data concerning two products appear below: How much overhead cost would be assigned to Product V91Z using the activity-based costing system? A. $ B. $3, C. $14, D. $113, Tisch Corporation manufactures and sells one product. The following information pertains to the company's first year of operations: The company does not have any variable manufacturing overhead costs or variable selling and administrative costs. During its first year of operations, the company produced 20,000 units and sold 13,000 units. The company's only product is sold for $242 per unit. What is the net operating income for the year under super-variable costing? A. $(676,000) B. $(109,000) C. $507,000 D. $(11,000) 14. On November 1, Barnes Corporation has 8,000 units of Product A on hand. During the month, the company plans to sell 30,000 units of Product A, and plans to have 6,500 units on hand at end of the month. How many units of Product A must be produced during the month? A. 30,000 B. 31,500 C. 28,500 D. 36, Last year, Rassel Corporation's variable costing net operating income was $63,200. Fixed

5 manufacturing overhead costs deferred in inventory under absorption costing amounted to $31,900. What was the absorption costing net operating income last year? A. $63,200 B. $31,900 C. $95,100 D. $31, Wahler Corporation manufactures and sells one product. In the company's first year of operations, the variable cost consisted solely of direct materials of $85 per unit. The annual fixed costs were $640,000 of direct labor cost, $2,208,000 of fixed manufacturing overhead expense, and $1,140,000 of fixed selling and administrative expense. The company does not have any variable manufacturing overhead costs or variable selling and administrative costs. During its first year of operations, the company produced 32,000 units and sold 30,000 units. The company's only product is sold for $249 per unit. What is the net operating income for the year under super-variable costing? A. $972,000 B. $1,110,000 C. $932,000 D. $762, The contribution margin ratio of Baginski Corporation's only product is 53%. The company's monthly fixed expense is $617,980 and the company's monthly target profit is $23,000. What are the dollar sales to attain that target profit closest to? A. $339,719 B. $1,209,396 C. $1,166,000 D. $327, Closser Corporation produces and sells two products. In the most recent month, Product M50S had sales of $39,000 and variable expenses of $12,870. Product H50G had sales of $12,000 and variable expenses of $4,980. The fixed expenses of the entire company were $33,050. What is the break-even point for the entire company closest to? A. $17,950 B. $50,846 C. $50,900 D. $33, The Agate Corporation manufactures and sells two types of bookcases, standard and deluxe. Agate expects the following operating results next year for each type of bookcase: Agate expects to have a total of $57,600 in fixed expenses next year. What is Agate's break-even point next year in sales dollars? A. $144,000

6 B. $72,000 C. $96,000 D. $240, Sharron Inc., which produces a single product, has provided the following data for its most recent month of operations: There were no beginning or ending inventories. What was the variable costing unit product cost? A. $117 per unit B. $111 per unit C. $190 per unit D. $110 per unit End of exam