Practice Managerial Problems

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

\$120,000

40,000

80,000

Salaries and Commissions 30,000

Rent 24,000

Other Fixed Expenses 8,750

Total Operating Expenses 62,750

Net Income \$ 17,250

For Danfield, the number of dogs he needs to sell to break even are

A) 34,033

B)

C)

D)

E)

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 \$22 \$40 \$60

Variable costs 12 16 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) 54.0%

B) \$36.00

C) \$26.00

D) 52.7%

E) none of these

3)

The sales needed to make breakeven are:

A) \$ 18,975,332.07

B) \$ 27,608,777.80

C) \$ 15,000,000.00

D) \$ 9,250,259.26

E) none of these

4)

How many boxes of SmallBaby diapers will Alice

’s need to sell to make \$4,000,000?

A) 185,185

B) 270,010

C) 199,241

D) 925,926

E) 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. 30,000

B. 41,667

C. 70,833

D. 62,500

E. 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) 15

B) 10

C) 35

D) 20

E) Some other number

7)

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

Selling Price

Variable Costs

Regular

\$ 20

Silver

\$ 30

Gold

\$60

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) \$ 1,875,580

B) \$ 1,338,290

C) \$ 1,500,000

D) \$ 2,075,653

E) Some other number

9)

How much must the sales volume be to make \$300,000?

A) \$ 1,875,000

B) \$ 1,250,698

C) \$ 1,500,000

D) \$ 2,007,435

E) Some other number

10)

How many units of Regular must Cleveland Cliffs sell to breakeven?

A) 40,149

B) 50,000

C) 43,458

D) 31,255

E) Some other number