GB212 Assignment 10
Spring 2020
1. XXXXXXXXXXWhich of the following should a management team review to analyze a fixed cost variance?
A. The sales volume variance for fixed costs
B. The flexible budget variance for fixed costs
C. Both A and B above
D. None of the above
2. Using the information below, calculate the spending (flexible budget) variance for direct labor costs
2019 Standard (Budget) 2019 Actual
Sales price per unit $200 $199
Direct materials per unit $100 $102
Direct labor per unit $30 $28
Fixed overhead costs $200,000 $195,000
Units Sold XXXXXXXXXX12,000 XXXXXXXXXX11,900
A. $23,800 favorable
B. $3,000 favorable
C. $26,800 favorable
D. $3,000 unfavorable
3. Kramerica Inc. has forecast sales to be $600,000 in January, $480,000 in Fe
uary, $500,000 in March and $620,000 in April. Forty percent of sales are made in cash, with the remainder on credit. Credit sales are collected 70% in the month of sale, and 30% in the following month. What are budgeted cash collections for April?
A. $598,400
B. $248,000
C. $508,400
D. $350,400
4. Costanza Inc., a stationary reseller, forecasted its sales for the next three months as follows: January 8,000 boxes, Fe
uary 10,000 boxes, March 14,000 boxes. The unit cost of each box is $45. Selling and administrative expenses are budgeted to be $20,000 per month plus $8 per unit sold. What are budgeted selling and administrative expenses for Fe
uary?
A. $20,000
B. $450,000
C. $100,000
D. $132,000
5.Braun Corporation, a computer reseller, began January with 4,000 computers on hand. During the month, Braun purchased 9,600 computers and sold 10,000 computers. Assuming that Braun has an ending goods inventory policy to have a fixed percentage of the following month’s sales on hand, what are Braun’s projected computer sales for Fe
uary?
A. 9,000 computers
B. 10,000 computers
C. 9,600 computers
D. None of the above
6. Susan Ross wants to know how many years it will take for her to double her savings if she can invest her money and earn 9% compounded monthly. How many years will Susan have to wait to double her money?
A XXXXXXXXXXyears
B. 8.04 years
C XXXXXXXXXXyears
D. The answer depends on how much Susan invests
7. David Puddy is car shopping and plans to buy a 2019 Toyota Corolla. After making a down payment, David plans to bo
ow $21,000 from his bank. The bank offers 4-year (48-month) car loans. David’s budget allows him to pay $500 monthly (at the end of each month) for the car. What is the maximum monthly interest rate that David can accept to keep his monthly payments to no more than $500 per month?
A. 6.70%
B. 5.56%
C. 0.56%
D. 0.42%
8. Joe Davola planned to begin saving for his retirement starting next month. Joe’s plan was to invest $450 per month, starting at the end of next month, for the next 25 years. Because of some unexpected circumstances, Joe will not be able to begin funding his retirement for 12 months. If Joe wants to end up with the same amount of total savings in 25 years, how much would Joe have to save per month over the 24-year period? Assume that Joe will be able to earn 6% annually on his investment.
A. $23,345.18
B. $81.06
C. $486.41
D. $36.41
9. Which of the following alternatives would a logical and sensible investor choose?
A. Bo
ow money with an interest rate of 7% with monthly compounding, rather than bo
owing money with an interest rate of 7% with annual compounding
B. Invest money with an interest rate of 5% with annual compounding, rather than investing money with an interest rate of 5% with monthly compounding
C. Bo
ow money with an interest rate of 9% with quarterly compounding, rather than bo
owing money with an interest rate of 9% with semiannual compounding
D. Invest money with an interest rate of 5% with quarterly compounding, rather than investing money with an interest rate of 5% with semiannual compounding
10. Which of the following will increase the
eakeven units for a company?
A. A $1 decrease in the variable costs per unit and a $20,000 decrease in fixed costs
B. A $3 increase in the selling price per unit and a $1 decrease in the variable costs per unit
C. A $2 increase in the variable costs per unit and a $1 increase in the selling price per unit
D. A $5 increase in the selling price per unit and a $20,000 decrease in fixed costs
11. H&H Bagels sells bagels in packages of six bagels. In April 2020, H&H sold 15,000 packages with a unit price of $8.80 each. H&H had $45,895 of fixed costs and calculated its
eakeven volume at 6,850 packages for the month of April. What were H&H’s variable costs per unit and how much did H&H incur in total variable costs in April?
A. $2.10 and $31,500
B. $6.70 and $100,500
C. $2.10 and $14,385
D. $6.70 and $45,895
12. Bania’s Soup Company is considering accepting a special order for its soup. The normal sales price of a case of soup is $22 and the variable cost per case of soup is $17. Bania’s total fixed costs are $10,000, which is equivalent to $5 per case. Normal volume is 2,000 cases of soup. The relevant range is 1,000 – 4,000 cases. The company has received a special order for 200 cases of soup at a price of $19 per case. If they accept the order:
A. Their profits will increase by $3,800
B. Their profits will increase by $400
C. Their profits will decrease by $600
D Their profits will decrease by $1,400
13. Which of the following costs should not be included by Kassem’s Soup Restaurant in its capital budgeting analysis to determine whether to add sandwiches to its cu
ent menu of all soup?
A. $5,800 in lost sales from customers who were expected to buy soup and are now expected to buy sandwiches
B. $3,500 in advertising costs related to launching the sandwich line
C. $900 in sandwich inventory as part of the initial cash flow
D. $ 1,700 in costs previously spent on a market research study related to customer sandwich buying patterns
14. Pendant Publishing is considering a new product line that has expected sales of $1,100,000 per year for each of the next 5 years. New equipment that is required to produce the new product will cost $1,200,000. The equipment has a useful life of 5 years and a $300,000 salvage value and will be sold at the end of year 5 for its’ salvage value. Total variable costs of the product line are $450,000 per year, total fixed costs (not including depreciation) will be an additional $180,000 per year and the initial working capital investment, to buy inventory, will be $15,000. The discount rate (interest rate) for the project is 10% and the company’s tax rate is 35%. What is the operating cash flow of year 1 for the company?
A. $305,500
B. $368,500
C. $470,000
D. ($846,500)
15. Rick Ba
Inc. is considering a new product line that has expected sales of $500,000 per year for each of the next 5 years. New equipment that is required to produce the new product will cost $800,000. The equipment has a useful life of 5 years and an $80,000 salvage value and will be sold at the end of year 5 for its salvage value. Total variable costs of the product line are $230,000 per year, total fixed costs (not including depreciation) will be an additional $100,000 per year and the initial working capital investment, to buy inventory, will be $10,000. The discount rate (interest rate) for the project is 10% and the company’s tax rate is 35%. What is