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# BEC questions: Bartlett Company, Kern Co., and Ordering Cost

1. Bartlett Company is considering a new product, Pear. Bartlett's fixed costs are \$200,000. Pear's contribution margin is \$200 per unit. Bartlett has a marginal tax rate of 25%. How many units of Pear would Bartlett have to sell to have after-tax net income of \$1,000,000?

a. 2,250 units
b. 4,750 units
c. 5,000 units
d. 7,667 units

2.During May, Kern Co. produced and sold 10,000 units of a product. Manufacturing and selling costs incurred during May were as follows:
Direct materials and direct labor \$200,000
Variable selling costs \$5,000
The product's unit cost under direct (variable) costing was

a. \$24.50
b. \$25.00
c. \$25.50
d. \$26.00

3.What costs are included in ordering costs in the economic order quantity model?

a. Handling
b. Insurance
c. Interest on invested capital
d. Quantity discounts lost.

#### Solution Summary

The attached MS Excel spreadsheet contains detailed illustrations for the calculation of after-tax income from contribution margin and marginal tax rate data, the determination of unit cost under direct (variable) cost information, and ordering costs in the economic order quantity model.

\$2.19