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| 1 | |
Spiked Hair Grooming Company makes and sells hair gel and mousse. Consumer demand for Spiked’s hair gel and mousse is high-it can sell an unlimited amount of either product. Following is the information available for each product:
| Gel | Mousse | Units of output per machine hour | 100 | 250 | Selling price per unit | $6.00 | $4.00 | Product cost per unit |
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| Direct materials | $0.75 | $0.50 | Direct labour | $1.10 | $1.25 | Variable overhead | $0.15 | $0.25 | Total fixed overhead | $420 000 | Total fixed selling and administration costs | $180 000 |
Spiked Hair Grooming Company has 2000 machine hours available for production. The sales mix which will maximise profits is: |
| | A) | 200 000 units of gel and 0 units of mousse |
| | B) | 0 units of gel and 500 000 units of mousse |
| | C) | 100 000 units of gel and 250 000 units of mousse |
| | D) | 57 143 units of gel and 178 571 units of mousse |
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| 2 | |
Spiked Hair Grooming Company makes and sells hair gel and mousse. Consumer demand for Spiked’s hair gel and mousse is high-it can sell an unlimited amount of either product. Following is the information available for each product:
| Gel | Mousse | Units of output per machine hour | 100 | 250 | Selling price per unit | $6.00 | $4.00 | Product cost per unit |
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| Direct materials | $0.75 | $0.50 | Direct labour | $1.10 | $1.25 | Variable overhead | $0.15 | $0.25 | Total fixed overhead | $420 000 | Total fixed selling and administration costs | $180 000 |
Spiked Hair Grooming Company has 2000 machine hours available for production. The net profit at the profit maximising sales mix is: |
| | A) | $1 000 000 |
| | B) | $580 000 |
| | C) | $400 000 |
| | D) | $200 0000 |
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| 3 | |
Rapid Printing Company estimated the following annual costs: Labour rate, including fringe benefits | $17.50 per hour | Annual labour hours | 8 000 hours | Annual overhead: |
| Material handling and storage | $45 000 | Other overhead costs | $90 000 | Annual cost of material used | $450 000 | Hourly charge to cover profit margin | $12.50 per hour |
What material charge formula would be used to include a charge for the handling and storage of material on every job? |
| | A) | Cost of material only. |
| | B) | Cost of material + $17.50 per labour hour. |
| | C) | Cost of material + $30 per labour hour. |
| | D) | Cost of material + $0.10 per $1 of material. |
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| 4 | |
Rapid Printing Company estimated the following annual costs: Labour rate, including fringe benefits | $17.50 per hour | Annual labour hours | 8 000 hours | Annual overhead: |
| Material handling and storage | $45 000 | Other overhead costs | $90 000 | Annual cost of material used | $450 000 | Hourly charge to cover profit margin | $12.50 per hour |
What time charge formula would be used to include overhead and profit margin? |
| | A) | Hourly labour cost. |
| | B) | Hourly labour cost + $17.50 per hour. |
| | C) | Hourly labour cost + $11.25 per hour. |
| | D) | Hourly labour cost + $23.75 per hour. |
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| 5 | |
Rapid Printing Company estimated the following annual costs: Labour rate, including fringe benefits | $17.50 per hour | Annual labour hours | 8 000 hours | Annual overhead: |
| Material handling and storage | $45 000 | Other overhead costs | $90 000 | Annual cost of material used | $450 000 | Hourly charge to cover profit margin | $12.50 per hour |
If a wedding invitation job required 10 hours of labour and $3500 of material, the price that Rapid Printing would quote for the job is: |
| | A) | $3675 |
| | B) | $3800 |
| | C) | $4262.50 |
| | D) | $4025 |
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| 6 | |
A product manufactured by Bulleen Industries has the following revenue and cost information: Selling price per unit | $100 | Direct material per unit | $25 | Direct labour per unit | $20 | Variable overhead per unit | $10 | Fixed overhead per unit | $15 | Variable selling and administration per unit | $5 | Fixed selling and administration | $250 000 | Average amount of capital invested | $10 000 000 | Target return on investment | 20% | Number of units produced and sold | 250 000 |
If Bulleen Industries uses cost-plus pricing based on absorption cost and return on investment pricing to determine the profit margin it requires, the markup percentage that the company must use would be: |
| | A) | 20% |
| | B) | 46.67% |
| | C) | 40% |
| | D) | 10% |
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| 7 | |
A product manufactured by Bulleen Industries has the following revenue and cost information: Selling price per unit | $100 | Direct material per unit | $25 | Direct labour per unit | $20 | Variable overhead per unit | $10 | Fixed overhead per unit | $15 | Variable selling and administration per unit | $5 | Fixed selling and administration | $250 000 | Average amount of capital invested | $10 000 000 | Target return on investment | 20% | Number of units produced and sold | 250 000 |
If Bulleen Industries uses cost-plus pricing based on total variable costs and uses return on investment pricing to determine the profit margin it requires, the markup percentage the company must use would be: |
| | A) | 20% |
| | B) | 46.67% |
| | C) | 40% |
| | D) | 10% |
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| 8 | |
Spiked Hair Grooming Company makes and sells hair gel and mousse. Spiked can sell a maximum of 100 000 units of hair gel and 300 000 units of mousse that it produces. Following is the information available for each product:
| Gel | Mousse | Units of output per machine hour | 100 | 250 | Selling price per unit | $6.00 | $4.00 | Product cost per unit |
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| Direct materials | $0.75 | $0.50 | Direct labour | $1.10 | $1.25 | Variable overhead | $0.15 | $0.25 | Total fixed overhead | $420 000 |
Spiked Hair Grooming Company has 2000 machine hours available for production. Which sales mix will maximise profits? |
| | A) | 200 000 units of gel and 0 units of mousse. |
| | B) | 80 000 units of gel and 300 000 units of mousse. |
| | C) | 100 000 units of gel and 300 000 units of mousse. |
| | D) | 8000 units of gel and 300 000 units of mousse. |
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| 9 | |
In linear programming, the constraints are: |
| | A) | the feasible region |
| | B) | the optimum solution |
| | C) | the limitations faced by the firm |
| | D) | the maximum contribution margin per unit of scarce resource |
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| 10 | |
Ivanhoe Company is currently involved in a competitive bidding situation. Variable costs related to the project total $500 000, estimated fixed overhead is $120 000 and the target profit is $75 000. The minimum bid price if Ivanhoe has no excess capacity is: |
| | A) | $500 000 |
| | B) | $620 000 |
| | C) | $695 000 |
| | D) | $120 000 |
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