1. Office Supply store costs are expressed as a function of the unit sales of its two products: office
chairs and task desks. Assume fixed costs are $9,000 per month and the variable costs are $60
per office chair and $125 per task desk.
What are Office Supply’s estimated costs for the month if 100 office chairs and 52 task desks are
sold?
A. $25,000
B. $20,500
C. $21,500
D. $22,000
2. Ken Corporation is selling its product at unit price of $15, variable cost per unit is $7, fixed cost
is $12,000 and it is subjected to 40 percent tax rate (includes federal and state income tax).
The desired after-tax profit is $3,000, the number of units required to be sold is:
A. 2,125 units
B. 1,500 units
C. 1,875 units
D. 2,152 units
3. The FIFA sports store sells 1 World Cup soccer ball for every 4 regular style balls.
World
Cup
Soccer
Ball
Regular
Style
Soccer
Ball
Sale price per ball $20 $10
Variable cost per
ball $10 $ 5
Total Fixed Cost for FIFA sports $12,000. Assuming a constant sales mix. The break-even unit
sales volume is:
A. 2,000
B. 7,200
C. 9,023
D. 3,840
4. Peak Company sells three different products that are similar, but are differentiated by various
product features. Budgeted sales by product and in total for the coming year are shown below:
Product
Standard Deluxe Premium Total
Percentage 58% 10% 32% 100%
of total sales
Sales $120,000 $50,000 $80,000 $250,000
Less:
Variable
costs
36,000 40,000 44,000 120,000
Contribution
margin
$ 84,000 $10,000 $36,000 $130,000
Less: Fixed
expenses
$117,000
Net
operating
income
$ 13,000
If customers are indifferent to which of the products to purchase from Peak Company, which
product line should sales personnel recommend to customers that would most improve overall
operating income?
A. Product line with the highest percentage of total budgeted sales
B. Product line with the lowest variable cost
C. Product line with the highest contribution margin ratio
D. Product line with the highest sales price
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