Fluctuating demand in b2b marketing examples

TB MC Qu. 03-52 Dybala Corporation produces and sells...

Dybala Corporation produces and sells a single product. Data concerning that product appear below:

Per Unit

Percent of Sales

Selling price

$

130

100

%

Variable expenses

91

70

%

Contribution margin

39

30

%

The company is currently selling 6,200 units per month. Fixed expenses are $220,000 per month. The marketing manager believes that a $6,700 increase in the monthly advertising budget would result in a 240 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

rev: 08_18_2016_QC_CS-57562

decrease of $6,700

decrease of $2,660

increase of $9,360

increase of $2,660

2.

TB MC Qu. 04-88 Acton Corporation, which applies manufacturing...

Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations.

Estimated manufacturing overhead

$176,700

Estimated machine-hours

1,900

Actual manufacturing overhead

$168,100

Actual machine-hours

1,820

The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year. The overhead for the year was:

Noreen 4e Recheck 2017-16-03

$7,440 underapplied

$7,440 overapplied

$1,160 overapplied

$1,160 underapplied

3.

TB MC Qu. 09-58 Prester Corporation has budgeted production...

Prester Corporation has budgeted production for next year as follows:

Quarter

First

Second

Third

Fourth

Production in units

76,800

89,100

93,000

112,800

Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for material A. A total of 38,200 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be:

224,700 pounds

178,200 pounds

180,150 pounds

176,250 pounds

4.

TB MC Qu. 11-47 Degregorio Corporation makes a product...

Degregorio Corporation makes a product that uses a material with the following direct material standards:

Standard quantity

2.4

kilos per unit

Standard price

$6

per kilo

The company produced 6,600 units in November using 16,180 kilos of the material. During the month, the company purchased 18,220 kilos of the direct material at a total cost of $105,676. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for November is:

$2,040 F

$1,946 U

$1,946 F

$2,040 U

5.

TB MC Qu. 08-128 (Ignore income taxes in this problem.) Lajeunesse...

(Ignore income taxes in this problem.) Lajeunesse Corporation uses a discount rate of 10% in its capital budgeting. Partial analysis of an investment in automated equipment with a useful life of 9 years has thus far yielded a net present value of $(192,250). This analysis did not include any estimates of the intangible benefits of automating this process nor did it include any estimate of the salvage value of the equipment.

Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determine the appropriate discount factor(s) using tables. Ignoring any salvage value, to the nearest whole dollar how large would the additional cash flow per year from the intangible benefits have to be to make the investment in the automated equipment financially attractive?

rev: 12_19_2017_QC_CS-112654

$25,331

$33,383

$192,250

$17,012

6.

TB MC Qu. 12-65 Last year the Uptown Division of Gorcen Enterprise...

Last year the Uptown Division of Gorcen Enterprises had sales of $693,000 and a net operating income of $46,530. The average operating assets at Uptown last year amounted to $198,000. Last year at Uptown the return on investment was: (Do not round intermediate calculations.)

24%

29%

12%

16%

7.

TB MC Qu. 06-39 Hochberg Corporation uses an activity-based...

Hochberg Corporation uses an activity-based costing system with the following three activity cost pools:

Activity Cost Pool

Total Activity

Fabrication

30,000

machine-hours

Order processing

375

orders

Other

Not applicable

The Other activity cost pool is used to accumulate costs of idle capacity and organization-sustaining costs. The company has provided the following data concerning its costs:

Wages and salaries

$

513,000

Depreciation

123,000

Occupancy

155,000

Total

$

791,000

The distribution of resource consumption across activity cost pools is given below:

Activity Cost Pools

Fabricating

Order Processing

Other

Total

Wages and salaries

25%

60%

15%

100%

Depreciation

15%

25%

60%

100%

Occupancy

30%

50%

20%

100%

The activity rate for the Fabrication activity cost pool is closest to:

Noreen 4e Rechecks 2017-24-03

$6.44 per machine-hour

$1.60 per machine-hour

$6.59 per machine-hour

$3.20 per machine-hour

8.

TB MC Qu. 05-57 A manufacturing company that produces...

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

Selling price

$

145

Units in beginning inventory

0

Units produced

2,440

Units sold

2,280

Units in ending inventory

160

Variable cost per unit:

Direct materials

$

49

Direct labor

$

17

Variable manufacturing overhead

$

17

Variable selling and administrative

$

10

Fixed costs:

Fixed manufacturing overhead

$

85,400

Fixed selling and administrative expenses

$

22,800

The total gross margin for the month under absorption costing is:

$61,560

$107,760

$118,560

$15,960

9.

TB MC Qu. 08-101 (Ignore income taxes in this problem.) Overland Corporation...

(Ignore income taxes in this problem.) Overland Corporation has gathered the following data on a proposed investment project:

Click here to view Exhibit 8B-1 and Exhibit 8B-2 to determine the appropriate discount factor(s) using tables.

Investment required in equipment

$

440,000

Annual cash inflows

$

77,000

Salvage value of equipment

$

0

Life of the investment

20

years

Discount rate

13

%

The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.

The internal rate of return on the investment is closest to:

15%

19%

13%

17%

10.

TB MC Qu. 04-67 Zander Inc. uses...

Zander Inc. uses a job-order costing system in which any underapplied or overapplied overhead is closed to cost of goods sold at the end of the month. In July the company completed job F21X that consisted of 16,500 units of one of the company's standard products. No other jobs were in process during the month. The job cost sheet for job F21X shows the following costs:

Beginning balance

$61,050

Direct materials

$551,100

Direct labor cost

$224,400

Manufacturing overhead cost applied

$316,800

During the month, the actual manufacturing overhead cost incurred was $313,500 and 11,000 completed units from job F21X were sold. No other products were sold during the month. The unadjusted cost of goods sold (in other words, the cost of goods sold BEFORE adjustment for any underapplied or overapplied overhead) for July is closest to:

$768,900

$766,100

$1,092,300

$1,153,350

11.

TB MC Qu. 04-87 Acton Corporation, which applies manufacturing...

Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations.

Estimated manufacturing overhead

$84,100

Estimated machine-hours

1,000

Actual manufacturing overhead

$81,000

Actual machine-hours

970

The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year. The applied manufacturing overhead for the year is closest to:

$80,859

$80,216

$79,498

$81,577

12.

TB MC Qu. A-31 Minden Corporation estimates that the following...

Minden Corporation estimates that the following costs and activity would be associated with the manufacture and sale of product A:

Number of units sold annually

100,000

Required investment

$

528,000

Unit product cost

$

30

Selling and administrative expenses

$

394,000

If the company uses the absorption costing approach to cost-plus pricing described in the text and desires a 24.5% rate of return on investment (ROI), the required markup on absorption cost for Product A would be closest to:

Noreen rechecks 2017-04-04

17%

24%

12%

15%

13.