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1. Bexley Company produces retractable pens. November budgeted production costs aregiven below:

Pens to be produced 100,000

Direct material variable! "##,000

Direct $abor variable! "%&,000'upplies variable! "(),*00

'upervision +ixed! "%0,000

Depreciation +ixed! "(0,000

t-er +ixed! "10,000

n December, Bexley expects to produce /0,000 pens. ssuming no structural c-anges,w-at is Bexleys budgeted production cost per pen +or December2! "1.)(B! "1.&*C! "1.&/

D! "1./#Solurion: (33,000+48,000+27500)/100,000 + (40,000+20,000+10,000)/90,000 =

1.85

(. 3se t-e cost in+ormation in 1! above. n November, t-e actual direct labor costs were"%4,000 and Bexley produced and sold /0,000 pens. 5-e direct labor per+ormancevariance di++erence! is:! "*,000 un+avorable.B! "(,&00 un+avorable.C! "1,000 un+avorable.D! "*,000 +avorable.

Solution: $46,000 ($48,000/100,000 x 90,000) = 2,800 unf!or"l#

#. Bubbas stea6-ouse -as budgeted t-e +ollowing costs +or a mont- in w-ic- 1,400 stea6dinners will be sold: 7aterials, "%,0&08 -ourly labor variable!, "*,(008 rent +ixed!,"1,)(08 depreciation, "4008 and ot-er +ixed costs, "**0. 9ac- dinner sells +or "1(.40.ow muc- would Bubbas pro+it increase i+ 10 more dinners were sold2! "4&.B! ")(.C! "*(.D! "1(4.

Solution: ($12.60 (4,080+5,200)/1,600) x 10 = $68

%. manu+acturing company produces &0,000 units o+ product at a total cost o+ "(.%million. 5otal +ixed costs are "1 million. + t-e company increases production by (*;and uses a %0; mar6up t-e price per unit will be:! "#0.&0B! "#1.*%C! "#).10D! "#&.*0

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Solution: ($2,400,000 $1,000,000) / 80,000 = $17.50

$1,000,000 / (80,000 x 1.25) = $10.00

%otl &o't = $28.50

ri = ($18.50 x 1.4) = $38.50

3se t-e +ollowing to answer N Company?s mar6et +or t-e 7odel ** -as c-anged signi+icantly, and >N -as -ad to drop t-eprice per unit +rom "(&* to "(00. 5-ere are some units in t-e wor6 in process inventory t-at -avecosts o+ "(&0 per unit associated wit- t-em. >N could sell t-ese units in t-eir current state +or"140 eac-. t will cost >N "#* per unit to complete t-ese units so t-at t-ey can be sold +or "(00eac-.

*. new employee loo6s at t-e analysis and exclaims, @Ae?ll lose money wit- eit-er o+t-ese alternatives $et?s ust t-row t-ese units in t-e tras- 'uppose t-e alternative totras-ing is c-oosing t-e more pro+itable o+ t-e two alternatives t-at t-e new employeeloo6ed at and did not li6e!. A-at e++ect will t-e tras-ing option t-at t-e new employee

wants! -ave on net income2! Net income will increase by "#* per unit +or eac- unit discarded.B! Net income will decrease by "11* per unit +or eac- unit discarded.C! t will -ave no e++ect on net income.D! Net income will decrease by "14* per unit +or eac- unit discarded.

4. A-en t-e incremental revenues and expenses are analyEed, t-e company is better o++ by! "* per unit i+ t-ey complete t-e units.B! "1* per unit i+ t-ey sell t-e units in t-eir current state.C! "(* per unit i+ t-ey sell t-e units in t-eir current state.D! "#* per unit i+ t-ey complete t-e units.

). company using activity based pricing mar6s up t-e direct cost o+ goods by #/; plusc-arges customers +or indirect costs based on t-e activities utiliEed by t-e customer.ndirect costs are c-arged as +ollows: "4.00 per order placed8 "#.00 per separate itemordered8 "(&.00 per return. customer places 10 orders wit- a total direct cost o+"(,(10, orders #1( separate items, and ma6es & returns. A-at will t-e customer bec-arged2! "#,000B! "%,(/(C! "*,##0D! "*,)**

Solution: ($6 x 10) + (3 x 312) + (28 x 8) = 1220 + (2210 x 1.39) = $4,292

&. 7anu+acturing over-ead is allocated to products based on t-e number o+ mac-ine -oursre

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C! "1,1(0D! "*0,000Solution: ($125,000 / 20,000 x 7,000) = $43,750

3se t-e +ollowing in+ormation to answer

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Controllable Pro+it "%),000 "%%,&00 ="(,(00

n evaluating t-e department in terms o+ its increase in sales and expenses, w-at will bemost important to investigate2! 'ales

B! Cost o+ ingredientsC! 'alariesD! ll t-ree components -ave e

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1). Aestern pparel Company owns two stores and management is considering eliminatingt-e 9ast store due to declining sales. 'egmented contribution income statements are as+ollows and common +ixed costs are allocated on t-e basis o+ sales.

Aest 9ast 5otal'ales "*00,*00 /0,000 "*/0,*00

Hariable costs (4(,*00 %*,000 #0),*00Direct +ixed costs 4(,*00 (*,000 &),*00'egment margin 1)*,*00 (0,000 1/*,*00llocated +ixed costs 1#),*00 #*,000 1)(,*00Net ncome "#&,000 "1*,000! "(#,000Aestern +eels t-at i+ t-ey eliminate t-e 9ast store t-at sales in t-e Aest store willdecline by 1*;. + t-ey close t-e 9ast store, overall company net income will:! decline by "/0,000.B! decline by "4(,000.C! decline by "&*,4(*.

D! decline by "**,)00.Solution = *urr#nt rofit = $23,000#- rofit = ((500,500 262,500) x 85) 62,500 172,500 = 32700

#&lin# in rofit = 32700 23000 = 55700

1&. n Kuly (4, (01(, radio '-ac6 announced disappointing (ndadio '-ac6s store count and+ixed costs were t-e same in t-e (nd

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Dye Company approac-es nderson wit- a special order +or 1*,000 units at a price o+ ").*0 perunit. Hariable costs will be t-e same as t-e current production and accepting t-e special order willnot -ave any impact on t-e rest o+ t-e company?s orders. owever, nderson is operating atcapacity and will incur an additional "*0,000 in +ixed manu+acturing over-ead i+ t-e order is

accepted.

1/. A-at is t-e incremental income loss! associated wit- accepting t-e special order2! "1%,000!B! "#4,000C! "(#,*00!D! "(),000

Solution= (15,000 x 7.50) ((150,000+125,000+235,000)/100,000 x 15,000) 50,000 = (14,000)

(0. A-at is t-e incremental revenue associated wit- accepting t-e special order2! "1)0,000

B! "11(,*00C! ")0,000D! "1(0,000Solution= (15,000 x 7.50) = $112,500

(1. nnovations, nc is loo6ing to ac-ieve a net income o+ 1* percent o+ sales. 3nit salesprice is "108 variable cost per unit is "48 total +ixed costs are "*0,000 w-at is t-e level o+sales in units! re

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(#. n auto executive is considering -ow to price a (01% -ybrid in order to maximiEe pro+its +or t-e company. 7anu+acturing eac- -ybrid involves "/,*00 o+ materials, "1(,*00 o+ labor,

"#,&00 o+ s-ipping and "%,000 o+ ot-er supplies. 5-e +acility w-ere t-e car is manu+actured-as "1(.* million o+ +ixed costs. 5-e mar6eting department says t-at adding a Bose sound

system would boost demand, but it would add an additional ")*0 per car.

5-e

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(%. 5-e Bell+ont Company uses cost=plus pricing wit- *0; mar6=up. 5-e company iscurrently selling 100,000 units at "1( per unit. 9ac- unit -as a variable cost o+ "4. naddition, t-e company incurs "(00,000 in +ixed costs annually. + demand +alls to

"&0,000 and t-e company wants to earn a *0; return, w-at price s-ould t-e companyc-arge2! "10./*B! "1(.)*C! "1#.*0D! "1%.**

Solution: $200,000 + (80,000 x 6) + ($80,000 x 50) / 80,000 = 12.75

(*. Hisit +inance.ya-oo.com and determine w-ic- o+ t-e +ollowing statements is incorrect:! 5-e current mar6et cap o+ Ioogle is greater t-an t-e mar6et cap o+ 7icroso+t.B! 5-e current ratio +or t-e most recent eturn on e