Question:

Question 1: A company believes it can sell 1,000,000 units of its proposed new can opener at a price of $14.00 each. If the company desires to build a profit $3,000,000 on the can opener, what is the target cost per can opener?

A             $14.00

B             $11.00

C             $8.00

D             $17.00

Question 2: One customer orders $20,000,000 worth of product every year by making 50 electronic orders. The direct cost of these orders is $16,000,000. The customer orders an average of 20 separate items on each order (1,000 items for the year) and has ordered a net of 5,000,000 items through the year, and returns nothing. Using activity based methods, Evaluate the profit from this customer?

A             $4,000,000

B             $3,846,900

C             $2,950,000

D             $0

Question 3: You've just won a lottery and will get $60,000 per year over the next 20 years. If you feel that 10% is an appropriate rate of return, what is the present value of your winnings?

A             $1,200,000

B             $510,816

C             $251,550

D             $178,320

Question 4: Peirzynski Manufacturing Corporation produces a single product, the Utility Knife. Budgeted amounts for the coming year are as given:

Revenues (20,000 units at $12 each)        $240,000

Direct material  40,000

Direct labor         70,000

Variable manufacturing overhead            50,000

Fixed manufacturing overhead  30,000

Net income        $50,000

Question 5: Podsednik Company has provided to purchase 1,500 units of a special edition of the utility knife from Peirzynski at a price of $11.50 per unit. This special edition will have additional variable costs of $0.25 per unit. Peirzynski has the capacity to produce this order and it will not affect any of their other operations.

What is the incremental cost of accepting the special order?

A             $12,000

B             $14,250

C             $14,625

D             $12,375

Question:6 The BigByte Company has 12 outdated computers that are carried in inventory at a cost of $13,200. If these computers are upgraded at a cost of $7,500, they would be sold for $15,300. Alternatively, the calculators would be sold "as is" for $9,000. What is the total advantage or disadvantage of re-working the computers?

A             $6,300 advantage

B             $1,200 disadvantage

C             $5,400 disadvantage

D             $3,000 advantage