18. On July 26, 2012, radio Shack announced disappointing 2nd


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18. On July 26, 2012, radio Shack announced disappointing 2nd quarter earnings that caused the stock to fall 29% to all time lows. Although sales were up 1.2% to $953.2 million gross profit fell 16.6% to $360.3 million. Assuming Radio Shack’s store count and fixed costs were the same in the 2nd quarter of 2011 and 2012, which of the following statements is the best explanation for the decrease in the firm’s profitability? A) Opportunity costs decreased. B) Margin of safety decreased. C) Contribution margin decreased. D) Selling price decreased. Information for Questions 19-20 Anderson Manufacturing makes a single product. Budget information regarding the current period is given below: Revenue (100,000 units at $8.00) $800,000 Direct materials 150,000 Direct labor 125,000 Variable manufacturing overhead 235,000 Fixed manufacturing overhead 110,000 Net income $180,000 Dye Company approaches Anderson with a special order for 15,000 units at a price of $7.50 per unit. Variable costs will be the same as the current production and accepting the special order will not have any impact on the rest of the company’s orders. However, Anderson is operating at capacity and will incur an additional $50,000 in fixed manufacturing overhead if the order is accepted. 19. What is the incremental income (loss) associated with accepting the special order? A) ($14,000) B) $36,000 C) ($23,500) D) $27,000 20. What is the incremental revenue associated with accepting the special order? A) $170,000 B) $112,500 C) $70,000 D) $120,000 21. Innovations, Inc is looking to achieve a net income of 15 percent of sales. Unit sales price is $10; variable cost per unit is $6; total fixed costs are $50,000 what is the level of sales (in units) required to achieve a net income of 15 percent of sales? A) 12,000 units. B) 21,000 units. C) 16,000 units. D) 20,000 units. 22. Anthony’s Bakery sold 2,000 muffins last month and had fixed costs of $6,000. If production and sales are expected to increase by 10% next month, which of the following statements is true? A) Total fixed costs will decrease. B) Fixed cost per unit will decrease. C) Total fixed costs will increase. D) Fixed cost per unit will increase. 23. An auto executive is considering how to price a 2014 hybrid in order to maximize profits for the company. Manufacturing each hybrid involves $9,500 of materials, $12,500 of labor, $3,800 of shipping and $4,000 of other supplies. The facility where the car is manufactured has $12.5 million of fixed costs. The marketing department says that adding a Bose sound system would boost demand, but it would add an additional $750 per car. The quantity demanded at each unit price is as follows: Price Quantity Demanded (No Bose) Quantity Demanded (with Bose) $31,000 8,960 10,752 $32,000 7,168 8,602 $33,000 5,734 6,881 $34,000 4,588 5,505 $35,000 3,670 4,404 $36,000 2,936 3,523 $37,000 2,349 2,819 $38,000 1,879 2,255 $39,000 1,503 1,804 What profit maximizing price should the executive choose? A) $34,000 without Bose sound system. B) $39,000 with Bose sound system. C) $36,000 without Bose sound system. D) $35,000 with Bose sound system 24. The Bellfont Company uses cost-plus pricing with 50% mark-up. The company is currently selling 100,000 units at $12 per unit. Each unit has a variable cost of $6. In addition, the company incurs $200,000 in fixed costs annually. If demand falls to $80,000 and the company wants to earn a 50% return, what price should the company charge? A) $10.95 B) $12.75 C) $13.50 D) $14.55 bigrob882001
posted a question · Apr 26, 2014 at 7:46pm

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