Question Slappy Corporation lease

29 Jun Question Slappy Corporation lease

Question
Slappy Corporation leases its corporate headquarters building. This lease cost is fixed with respect to the company’s sales volume. In a recent month in which the sales volume was 20,000 units, the lease cost was $482,000.

1.

To the nearest whole dollar, what should be the total lease cost at a sales volume of 16,900 units in a month? (Assume that this sales volume is within the relevant range.)

A.

$407,290

B.

$482,000

C.

$570,414

D.

$444,645

2.

To the nearest whole cent, what should be the average lease cost per unit at a sales volume of 19,200 units in a month? (Assume that this sales volume is within the relevant range.)

A.

$28.52

B.

$24.60

C.

$25.10

D.

$24.10

Getchman Marketing, Inc., a merchandising company, reported sales of $592,500 and cost of goods sold of $305,000 for April. The company’s total variable selling expense was $37,500; its total fixed selling expense was $16,000; its total variable administrative expense was $35,000; and its total fixed administrative expense was $38,900. The cost of goods sold in this company is a variable cost.

3.

The contribution margin for April is:

A.

$465,100

B.

$287,500

C.

$160,100

D.

$215,000

4

The gross margin for April is:
A.

$287,500

B.

$215,000

C.

$537,600

D.

$160,100

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A company has provided the following data:

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5. If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net operating income will:

A.

decrease by $31,875.

B.

decrease by $15,000.

C.

increase by $20,625.

D.

decrease by $3,125.

6. Balonek Inc.’s contribution margin ratio is 57% and its fixed monthly expenses are $41,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company’s net operating income in a month when sales are $112,000?

A.

$63,840

B.

$7,160

C.

$71,000

D.

$22,840

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

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7. What is the absorption costing unit product cost for the month?

A.

$102

B.

$130

C.

$97

D.

$125

8. Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.77 direct labor-hours. The direct labor rate is $11.20 per direct labor-hour. The production budget calls for producing 7,100 units in October and 6,900 units in November. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,480 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?

A.

$122,752.00

B.

$120,736.00

C.

$120,881.60

D.

$122,606.40

9. A company’s current net operating income is $16,800 and its average operating assets are $80,000. The company’s required rate of return is 18%. A new project being considered would require an investment of $15,000 and would generate annual net operating income of $3,000. What is the residual income of the new project?