ACCT6273 ACCOUNTING QUIZ 4 QUESTIONS. MUST BE DONE IN 90 MINUTES!!!

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ACCT6273 Quiz 1 1.docx

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  • You are expected to complete the quiz in 90 minutes. 
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1 Name: ______________________________ (print or type) Quiz #1 ACCT 6273 There are 100 points on this quiz. Show your formulas and your work to receive partial credit. There is no partial credit for multiple choice or True/False. Problem 1 FunToys is introducing a new game. The expected costs for this game are as follows: Variable Manufacturing Expenses Fixed Manufacturing Expenses Variable Selling and Admin Expenses Fixed Selling and Admin Expenses $15 per unit $10,000 per year $3 per unit $5,000 per year The expected selling price is $20 per unit. a. Compute the contribution margin per unit. [5 points] Answer: ______________ b. Compute the breakeven point in units. [10 points] Answer: ______________ c. Compute the number of units which must be sold to earn $20,000 profit. [5 points] Answer: _____________ 2 d. Due to its excellent brand reputation and brand recognition, FunToys expects that it will sell 25,000 new games without spending anything on advertising for these games. However, if FunToys spends $25,000 on advertising for the games, an additional 20,000 games are expected to be sold. Should FunToys spend $25,000 on advertising? (Circle (or highlight) one) [5 points] Yes No Explain why: [5 points] e. If FunToys increases the price for this new game to $22 per game, do you expect the breakeven for the game to be greater than, or less than, the breakeven that you calculated in question 1b, above? (Circle (or highlight) one) [5 points] Greater than Explain why without using calculations: [5 points] Less than 3 f. Prepare a Contribution Margin Income Statement assuming that FunToys sets the price for the new game at $22, and that they sell 15,000 units. [10 points] 4 Problem 2 Contribution Margin Income Statements for Alpha Company and Beta Company are below: Revenue Less: Variable Cost Contribution Margin Less Fixed Cost Net Income Alpha $100,000 20,000 80,000 75,000 $ 5,000 Beta $100,000 75,000 25,000 20,000 $ 5,000 Assuming sales increase by $1,000, determine if each of the following statements is True or False. Circle (or highlight) the correct answer. [5 points each for a total of 20 points] a. Alpha’s net income will be more than Beta’s net income. True False b. Beta’s net income will increase by $200. True False c. Both companies will experience an increase in profit. True False d. Alpha’s net income will increase by $800. True False 5 Problem 3 1. Dodge Company expected to sell 150,000 games during the month of November. The following budgeted data are based on that level of sales: Revenue (150,000 games) Variable cost Fixed manufacturing cost Fixed selling and administrative cost Net operating income $2,400,000 1,425,000 250,000 500,000 $225,000 Dodge’s actual sales during November were 180,000 games. What should the net operating income during November have been? (Circle or highlight one) [5 points] a. $450,000 b. $270,000 c. $420,000 d. $510,000 2. Kritzberg Company sells a product at $60 per unit that has unit variable costs of $40. The company’s breakeven sales is $120,000. How much profit will the company make if it sells 4,000 units? (Circle or highlight one) [5 points] a. $40,000 b. $80,000 c. $120,000 d. $240,000 6 3. Once sales reach the breakeven point, each additional unit sold will: (Circle or highlight one) [10 points] a. increase fixed costs by a proportionate amount b. reduce the margin of safety c. increase profit by the contribution margin per unit d. decrease variable costs per unit 7 Problem 4 Golden Gloves Corporation manufactures and sells boxing equipment. Recent marketing activity caused a 20% increase in the number of units produced and sold. What is the impact of a 20% increase in volume on fixed cost per unit and total variable cost? (Circle or highlight the correct answer) [10 points] Fixed cost per unit Total variable cost a. No change No change b. Decrease Increase c. Decrease No change d. Decrease Decrease e. Increase No change f. Increase Increase g. Increase Decrease
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