Sam has a small watch shop selling only one type of watch which is very popular with students as it looks fantastic.

• Variable costs for each watch are $120
• Fixed costs for the shop are $6,000 per month
• Selling price is $180 per watch

Sam wants to make a $5,400 profit per month. How many watches does she need to sell to achieve this profit?

Select one:

a.

190

b.

100

c.

60

d.

125

e.

None of these is correct

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Hunter Ltd sells a unique product with the following information available:

	Sales price	$85 per unit
	Variable costs	$25 per unit
	Fixed Costs	$10,000
	Units produced and sold	1,250

If one more unit is sold, net income will:

Select one:

a.

decrease by $33

b.

increase by $52

c.

increase by $60

d.

decrease by $8

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Sales Extraordinaire sells one particular photo frame. It estimates that it can sell as many frames as it produces.

	Sales price per unit	$6.00
	Variable cost per unit	$3.00
	Fixed costs per annum	$9,000

Increasing the sales price to $8.00 and having a sales volume of 3,000 photo frames would result in:

a.

a profit of $6,000

b.

a profit of $1,000

c.

a loss of $1,000

d.

breaking even

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The contribution margin ratio is calculated as:

Select one:

a.

total contribution margin divided by total revenues

b.

total contribution margin divided by total variable costs

c.

total variable costs divided by contribution margin

d.

income divided by contribution margin

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Information about two products is as follows:

		Product E	Product Z
	Selling price per unit	$40	$65
	Variable costs per unit	15	45
	Contribution margin per unit	$25	$20

Eighty percent of sales in units are expected to be product E. Fixed costs are expected to be $90,000.

The company wants a before-tax income of $120,000.

How many units of product E should be sold?

Select one:

a.

875

b.

3,000

c.

7,000

d.

3,875

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If the opening cash balance at the beginning of June is $27,500, total cash inflows for the month are $38,000 and total cash outflows are $98,000 the opening cash balance at the beginning of July is:

Select one:

a.

$67,500 (surplus)

b.

$12,500 (surplus)

c.

$32,500 (deficit)

d.

cannot be calculated

e.

$87,500 (deficit)

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Budgets are said to be useful in promoting forward thinking and identification of short-term problems, because:

Select one:

a.

management can foresee future promotion opportunities

b.

management can react to problem areas as they occur

c.

potential problem areas can be identified early enough to allow management to explore ways of overcoming the problem

d.

All of these

e.

None of these

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What is the main way in which budgets provide a means of control in an organisation?

Select one:

a.

By allowing senior management to control lower level managers

b.

By allowing actual performance to be compared to budget targets

c.

By allowing budget targets to be set at maximum performance

d.

By allowing management to control the budget targets

e.

None of these

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Patiomaster Products manufactures patio furniture. The estimated numbers of sets to be sold for the last three months of 2022 is:

	Month	Sales
	October	10,000
	November	7,000
	December	5,000
	January	6,000

Finished goods inventory at the end of September is expected to be 3,000 units. Finished goods inventory is set at 30 percent of next month's sales.

How many patio sets will need to be produced in October?

Select one:

a.

9,100 units

b.

10,000 units

c.

10,900 units

d.

7,000 units

e.

none of these

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Projected sales for Tony Co. Ltd for next year and beginning and ending inventory data are as follows:

	Sales	20,000 units
	Beginning Inventory	1,000 units
	Targeted ending inventory	5,000 units

The selling price is $15 per unit. Each unit requires 3 kilograms of material which costs $2 per kg. The beginning inventory of raw materials is 3,000 kg. The company wants to have 2,400 kg of material in inventory at the end of the year.

The budgeted total purchase cost of direct materials would be:

Select one:

a.

$144,000

b.

$118,800

c.

$142,800

d.

$145,200