Question

Multiple Choice:

#1 Bryant Company sells glass vases at a wholesale price of $2.60 per unit. The variable cost of manufacture is $0.35 per unit. The monthly fixed costs are $9,000. Bryant's current sales are 25,000 units per month. If Bryant wants to increase operating income by 25%, how many additional units, must Bryant sell? (Round your intermediate calculations to two decimal places.)

a) 5,250 glass vases

b) 47,250 glass vases

c) 59,063 glass vases

d) 9,000 glass vases

#2 Paulson Company has provided the following information:

Price per unit	$50
Variable cost per unit	$15
Fixed costs per month	$16,000

What is the amount of sales in dollars required for Paulson to break even?

a) $53,333 b) $4,800 c) $16,000 d) $22,857

#3 Grimes Foods produces a gourmet salsa which sells for $28 per unit. Variable costs are $8 per unit, and fixed costs are $7,000 per month. If Grimes expects to sell 1,500 units, compute the margin of safety in dollars.

a) $9,200 b) $30,000 c) $32,200 d) $23,000

#4 Modiste, Inc. manufactures two kinds of bags-totes and satchels. The company allocates manufacturing overhead using a single plantwide rate with direct labor cost as the allocation base. Estimated overhead costs for the year are $26,000. Additional estimated information is given below.

	Totes	Sachels
Direct materials cost per unit	$32	$45
Direct labor cost per unit	$55	$63
Number of units	510	390

Calculate the predetermined overhead allocation rate. (Round your answer to two decimal places.)

a) 49.41% b) 1.58% c) 94.50% d) 92.69%

#5 Which would be an appropriate cost driver for the warranty services activity?

a) number of purchase orders

b) direct labor hours

c) number of service calls

d) number of batches

Answer 1