**Soft Mattress Inc. produces a queen and a king size soft bed Answer**

Use the following information to answer question 1:

Soft Mattress Inc. produces a queen and a king size soft bed.

Selected data follows:

Queen King

Sales price $525 $635

Direct material $350 $365

Direct labor $75 $85

Variable overhead $25 $35

Stuffing hours 1 31. Only two employees are trained to stuff mattresses. They

can work a maximum of 4,000 stuffing hours per year.

What is the contribution margin per limited resource for

each type of bed?

A. Queen $75, King $150

B. Queen $150, King $75

C. Queen $75, King $50

D. Queen $50, King $75

Use the following information to answer question 2:

Project A Project B

Initial investment $(2,000) $(4,000)

PV of cash inflows $2,600 $3,400

Net present value $600 $(600)2. Based upon profitability index, which project(s) would be acceptable?

A. A only C. Both A and B

B. B only D. Neither A nor B

Use the following information to answer question 3:

Sales price $6.00 per unit

Variable costs $2.25 per unit

Fixed costs $10,000

Units sold 20,0003. What is the break-even point in sales dollars?

A. $12,000 C. $17,500

B. $16,000 D. $18,460

Use the following information to answer question 4:

Volume Cost

1 unit $15

10 units $150

100 units $1,5004. What type of cost is given?

A. Fixed C. Step

B. Variable D. Mixed5. If the contribution margin ratio is 65% and fixed costs are $15,000, what would

sales have to be for a before-tax net income of $50,000? (Round your answer to

the nearest dollar.)

A. $100,000 C. $42,250

B. $65,000 D. $23,077

Use the following information to answer question 6:

Investment A Investment B

Initial cost $180,000 $270,000

Estimated useful life 3 years 3 years

Estimated annual savings in

cash operating costs $75,000 $120,000

Minimum desired rate of return 10% 12%

PV factor 2.4869 2.40186. Based on net present value, profitability index, and internal rate of return, which

investment(s) would be preferable?

A. A C. Both A and B

B. B D. Neither A nor B7. Which of the following statements best describes a comparison of net present value

(NPV) and internal rate of return (IRR)?

A. NPV can be adjusted for risk, but IRR can’t.

B. NPV is more useful than IRR when asset lives are equal and cash flows follow

similar patterns.

C. IRR should be modified using the profitability index to allow better comparison of

different-sized investments, while NPV doesn’t have to be modified.

D. Both NPV and IRR can be used for screening decisions.8. Management of a bookbinder is considering whether the hard cardboard for binding

should be made internally or purchased from a supplier for $2.35 per book. The

current internal production costs for the cardboard average $2.50 of variable costs

and $10,000 of fixed costs for the 20,000 books bound annually. What would you

recommend management do, and what is the effect on net income?

A. Make, increase NI by $3,000 C. Buy, increase NI by $3,000

B. Make, increase NI by $13,000 D. Buy, increase NI by $13,000

Use the following information to answer question 9:

Project A Project B

Investment $40,000 $50,000

Annuals $7,000 $5,0009. If a company has a policy of accepting projects with a payback period of seven years

or less, which project(s) would be acceptable?

A. A only C. Both A and B

B. B only D. Neither A nor B10. Taco Stand has monthly fixed costs of $750 and variable costs of $0.50 per taco. What

is Taco Stand’s total cost if 1,000 tacos are made?

A. $500 C. $1,000

B. $750 D. $1,250

Answer questions 11 and 12 from the following information:

Variable selling & admin. costs $2.00 per unit

Direct materials $7.50 per unit

Variable overhead $2.25 per unit

Direct labor $1.25 per unit

Fixed selling & admin. costs $50,000

Fixed overhead $75,000

Units sold 25,00011. What is the product cost per unit under variable costing?

A. $11 C. $14

B. $13 D. $1612. What is the product cost per unit under absorption costing?

A. $11 C. $14

B. $13 D. $1613. The cost equation y = $0 + $1.75x represents which type of cost?

A. Variable C. Step

B. Fixed D. Mixed

Use the following information to answer question 14:

FanCo needs 20,000 fan switches annually to complete their fans. They’ve learned of a

supplier who will sell them the exact switch that’s needed for assembly at a unit price

of $0.875. Current production costs for the switches are

Direct material $5,000

Direct labor $10,000

Variable overhead $2,500

Fixed overhead $1,000

If the switches are purchased rather than made, one-half of the fixed overhead costs

can be eliminated.14. What are the total relevant costs in this make-or-buy decision?

A. $15,000 C. $18,000

B. $17,500 D. $18,500Use the following results from a regression analysis of production costs to answer

question 18:

Multiple R .71196

R Square .50688

Adjusted R Square .50438

Standard Error 1.43764

Analysis of Variance

DF Sum of Squares Mean Square

Regression 1 418.52992 418.52992

Residual 197 407.16375 2.06682

F = 202.49935 Signif F = 0.0000

Variables in the Equation

Variable Coefficients Standard t Stat P-value

error

X variable 1 7.93958 .055794 14.230 0.0000

Intercept 204.070 261513 –.780 0.436118. What are total fixed costs, rounded to the nearest penny?

A. $204.07 C. $1,587.92

B. $793.96 D. $1,791.9919. Hotdogs, Inc. sells hot dogs for $2 each. The variable costs per hot dog are $1, and

the fixed overhead costs are $0.35. A summer camp wants to place a one-time order

for 100 hot dogs at a price of $1.25 each. What is the minimum price Hotdogs should

charge for this special order?

A. $1.00 C. $1.35

B. $1.25 D. $1.60

Use the following information from a pants manufacturer to answer questions 20 and 21:

Production Overhead Cost

January 10,500 pairs $40,250

February 10,675 pairs $41,000

March 11,500 pairs $44,250

April 12,500 pairs $45,250

May 11,000 pairs $43,75020. Using the high/low method, what is the variable cost per unit?

A. $2.50 C. $3.62

B. $2.75 D. $3.83

21. Using the high/low method, what is the fixed cost?

A. $30,250 C. $15,250

B. $29,750 D. $14,000

Use the following information to create a contribution margin income statement and

answer question 22:

Sales 150,000 units

Sales price $2.00 per unit

Variable costs $0.50 per unit

Fixed costs $80,000

22. What is the operating leverage? (Round your answer to two decimals.)

A. 0.50 C. 1.55

B. 1.50 D. 1.6723. The cost of producing whole kernel corn is $0.20 per can, and the can sells for $0.40.

Additional processing costs to produce creamed corn are $0.06 per can, and each can

sells for $0.45. If the corn is processed further and 1,000 cans are sold as creamed

corn rather than whole kernel corn, what is the effect on net income?

A. $450 increase C. $50 increase

B. $60 decrease D. $10 decrease24. Which of the following will increase contribution margin?

A. Decreasing sales price C. Decreasing variable cost

B. Decreasing fixed cost D. Increasing variable cost

25. If a manager is considering a project that will increase sales revenue by $120 without

affecting expenses, what would the after-tax revenue be, given a 30% tax rate?

A. $36 C. $120

B. $84 D. $150

For getting the instant download solution, Please click on the “PURCHASE” link below to get Soft Mattress Inc. produces a queen and a king size soft bed Answer

For instant digital download of the above solution or tutorial, please click on the below link and make an instant purchase. You will be guided to the PAYPAL Standard payment page wherein you can pay and you will receive an email immediately with a download link.

In case you find any problem in getting the download link or downloading the tutorial, please send us an email on mail@genietutorial.com