Practice Managerial Problems

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1) Danfield Corporation sells hot dogs for $3. The following is the projected
income statement for 2014. Variable costs are the cost of the dogs, $1 each, plus
a 10% sales commission
paid to the worker.
Sales
Cost of Dogs Sold
Gross Margin
Operating Expenses
Salaries and Commissions
Rent
Other Fixed Expenses
Total Operating Expenses
Net Income
$120,000
40,000
80,000
30,000
24,000
8,750
62,750
$ 17,250
For Danfield, the number of dogs he needs to sell to break even are
A)
B)
C)
D)
E)
34,033
35,000
37,000
29,853
none of these
2) Alice’s New Company makes diapers (lots of diapers!!) The company has three
sizes of diapers, Infant, Small Baby, and Large Baby. The controller has
prepared the following estimates for next year. (All projections are on a
per box basis).
Infant
Small Baby
Large Baby
Selling Price
Variable costs
$22
12
$40
16
$60
24
The sales mix is 50% of Infant, 30% of Small Baby and 20%of Large Baby
diapers.
Estimated fixed costs are $10,000,000.
The estimated weighted average contribution margin is
A)
B)
C)
D)
E)
54.0%
$36.00
$26.00
52.7%
none of these
3)
The sales needed to make breakeven are:
A)
B)
C)
D)
E)
$ 18,975,332.07
$ 27,608,777.80
$ 15,000,000.00
$ 9,250,259.26
none of these
4) How many boxes of SmallBaby diapers will Alice’s need to sell to make $4,000,000?
A)
B)
C)
D)
E)
185,185
270,010
199,241
925,926
none of these
5) How many units does a company have to sell to make a profit of $100,000 if the
selling price is $25 and the variable costs are $13 and the company has fixed costs of
$750,000?
A.
B.
C.
D.
E.
30,000
41,667
70,833
62,500
None of the above
6) Your club will sell Whatsits for $70.00. The players cost you $50 each. You rent a
table in Wendys to sell the Whatsits. You pay Wendy’s $200 rent. How many Whatsits
do you need to sell to make $500?
A)
B)
C)
D)
E)
7)
15
10
35
20
Some other number
Still on Whatsits, what is the break-even in dollars?
A ) $ 700
B) $ 1,750
C) $ 1,050
D) $ 3,600
E)
None of these
Barney’s Pens produces three models of pens, regular, silver and gold. Price and costs
of the three are as follows
Regular
Silver
Gold
Selling Price
$ 20
$ 30
$60
Variable Costs
12
20
25
Fixed costs are $600,000
The sales mix is Regular 60%, Silver 10% and Gold 30%
8)
What is the break-even in sales dollars?
A)
B)
C)
D)
E)
9)
How much must the sales volume be to make $300,000?
A)
B)
C)
D)
E)
10)
$ 1,875,580
$ 1,338,290
$ 1,500,000
$ 2,075,653
Some other number
$ 1,875,000
$ 1,250,698
$ 1,500,000
$ 2,007,435
Some other number
How many units of Regular must Cleveland Cliffs sell to breakeven?
A)
B)
C)
D)
E)
40,149
50,000
43,458
31,255
Some other number
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