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# Various business analysis questions (Winter Company, calculating unit variable cost, calculating fixed cost and more)

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4. Winter Company incurred direct materials costs of \$500,000 during the year.
Manufacturing overhead applied was \$90,000 and is applied at the rate of 60%
of direct labor costs. Winter Company's total manufacturing costs for the year were
a. \$740,000.00
b. \$644,000.00
c. \$590,000.00
d. \$944,000.00

Use the following information for questions 9-10

Month Miles Total Cost
January 80,000 \$135,000
February 50,000 100,000
March 70,000 120,000
April 90,000 160,000

9. In applying the high-low method, what is the unit variable cost?
a. \$1.60.
b. \$1.50.
c. \$1.80.
d. cannot be determined from the information given.

10. In applying the high-low method, what is the fixed cost?
a. \$25,000.00
b. \$40,000.00
c. \$20,000.00
d. \$60,000.00

12. The direct materials budget shows:
3,000 Units to be produced
6,000 Total pounds needed for production
6,600 Total materials required
What are the direct materials per unit?
a. 1.08 pounds
b. 2.0 pounds
c. 2.2 pounds
d. cannot be determined from the data.

13. If an investment center has generated a controllable margin of \$60,000 and sales of \$300,000, what
is the return on investment for the investment center if average operating assets were
\$500,000 during the period?
a. 12%
b. 20%
c. 48%
d. 60%

14. Given below is an excerpt from a management performance report:

Budget Actual Difference
\$1,000,000 \$1,050,000 \$50,000 Contribution margin
\$500,000 \$450,000 \$50,000 Controllable fixed costs
The manager's overall performance
a. is 20% below expectations.
b. is 20% above expectations.
c. is equal to expectations.
d. cannot be determined from information given.

15. The per-unit standards for direct materials are 2 gallons at \$4 per gallon. Last month, 5,600 gallons
of direct materials that actually cost \$21,200 were used to produce 3,000 units of product.
The direct materials quantity variance for last month was
a. \$1,600 favorable.
b. \$1,200 favorable.
c. \$1,600 unfavorable.
d. \$2,800 unfavorable.

16. A company uses 6,300 pounds of materials and exceeds the standard by 300 pounds. The
quantity variance is \$900 unfavorable. What is the standard price?
a. \$1.00.
b. \$2.00.
c. \$3.00.
d. Cannot be determined from the data provided.

Use the following information for questions 17-18

Sam's Manufacturing Company can make 100 units of a necessary component part with the following costs:

Direct Materials \$80,000
Direct Labor 13,000

17. If Sam's Manufacturing Company purchases the component externally, \$20,000 of the fixed costs can
be avoided. At what external price for the 100 units is the company indifferent between
a. \$160,000.00
b. \$113,000.00
c. \$153,000.00
d. \$133,000.00

18. If Sam's Manufacturing Company can purchase the component externally for \$145,000 and only
\$4,000 of the fixed costs can be avoided, what is the correct "make or buy" decision?
a. Make and save \$8,000
c. Make and save \$20,000

Use the following information for questions 19-20

Downing Company produces a high resolution computer monitor. The following information is
available for this product:

Fixed cost per unit \$50
Variable cost per unit 150
Total cost per unit 200
Desired ROI per unit 60

19. Downing Company's markup percentage would be
a. 120%.
b. 60%.
c. 40%.
d. 30%.

20. The target selling price for this monitor is
a. \$110.00
b. \$200.00
c. \$210.00
d. \$260.00
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(See attached file for full problem description)

#### Solution Summary

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