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# Multiple choice

3. Norville Creations wants to achieve an after-tax profit of \$45,000 for the year ended December 31, Year 1. The company sells its product for \$35 per unit and has a contribution margin ratio of 15%. the company's fixed costs are currently \$150,000 and its tax rate is 25%. How many units must Norville selll to achieve its after-tax profit objective?

a. 11,092
b. 37,143
c. 40,000
d. 62,857

4. Excalibur Corporation has developed a model to predict sales revenue for its line of beach towels and swimwear based on long-range weather forecasts. The sale of the line is positively correlated with mean temperature and the probability of the occurence of a particular range of mean temperatures, which is developed independently by the National Weather Service. The probability of mean temperature and realted sales of product line units are asd indicated below for the month of July:

Unit sales Temperature Probability
10,000 75-79 5%
30,000 80-84 25
50,000 84-87 50
40,000 87-89 15
25,000 over 90 5

What sales volume, in units, would Excalibur Corporation anticipate using the expected value approach?

a. 31,000
b. 40,250
c. 50,000
d. 155,000

5. Controllable margin is used as a refined measure of strategic business unit reporting that is best described as:

a. Margins reported to strategic business unit managers realted to the revenues and costs specifically within the managers control and responsibility.
b. contribution margin net of controllable fixed xcosts (those costs that managers can impact in less than one year.)
c. Margins exclusively focused on entirely direct costs.
d. Margins derived after comprehensive consideration of all costs designed to achieve strategic objectives.

#### Solution Preview

3. Units to be sold = (Fixed cost + desired pre tax income)/unit contribution margin
First convert the after tax income to before tax income
Before tax income = After ...

#### Solution Summary

The solution explains some multiple choice questions relating to expected value approach, units to sell for desired income and controllable margin

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