Question

Wild Inc. sells organic sunscreen at the beach. Each tube of sunscreen costs $3.00 to purchase, and sells for $11.00. Wild Inc. also pays its sales staff a $0.50 commission for every tube that is sold. If sales are 16,000 tubes of sunscreen, the contribution margin income statement would show a total contribution margin of:

$120,000

$48,000

$176,000

$128,000

Assume that when you graduate you are offered two jobs. One job is in Las Vegas and will pay $35,000 per year. The other job is in Boulder, Colorado and will pay $33,000 per year. The $2,000 difference in the salaries represents:

		a joint cost.
		a sunk cost.
		an irrelevant (not relevant) cost.
		an opportunity cost

A Company makes all purchases on credit. April purchases were budgeted to be $60,000 and May purchases were budgeted at $80,000. Purchases are paid for 40% in the month of purchase and 60% in the month following the month of purchase. The budgeted balance sheet for May 31 would show accounts payable of:

$48,000
		$36,000
		$24,000
		$72,000

Quick Inc. has prepared a planning budget for a volume of 15,000 units. On the planning budget rent is budgeted to be $30,000. The flexible budget prepared for an actual activity level of 20,000 units would have a value for rent of:

$15,000
		$30,000
		$35,000
		$40,000

Action Inc. forecasts sales for May to be 400,000 units and has a policy that the ending inventory in any month should be 25% of the following month’s expected sales. The company’s desired ending finished goods inventory for May has been determined to be 80,000 units. Budgeted production in units for the period is:

420,000
		400,000
		480,000
		380,000

Answer 1