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Free CMA Exam Braindumps (page: 107)

Page 107 of 336
PDF with 1336 Questions
View Related Case Study

Bakker Industries sells three products (Products 611 613. and 615) that it manufactures in a factory consisting of one department Both labor and machine time are applied to the products Bakker's management is planning its production schedule for the next several months. There are labor shortages in the community. Some of the machines will be out of service for extensive overtraining. Available machine and labor time for each of the next 6 months is listed below


It Bakker's strategy is to maximize total profits, what is the total contribution?

  1. $113.150
  2. $193,500
  3. $215,300
  4. $280.800

Answer(s): B

Explanation:

The number of units being produced for each product multiplied by the contribution margin of the respective product will equate to the contribution of that product. The accumulation of the product contributions will give the total contribution of a department



View Related Case Study

The Summers Company manufactures a vanity of industrial valves. Current', the company is operating at about 70% capacity and is earning a satisfactory return on investment. Management has been approached by Glasgow Industries Ltd. of Scotland with an offer to buy 120.000 units of a pressure valve. Glasgow manufactures a valve that is almost identical to Summers' pressure valve; however, a fire in Glasgow Industries' valve plant has shut down its manufacturing operations. Glasgow needs the 120,000 valves over the next 4 months to meet commitments to its regular customers; the company is prepared to pay $19 each for the valves. FOB shipping point. Summers' product cost, based on current attainable standards. for the pressure valve is


How many additional direct Labor hours would be required each month to fill the Glascow order?

  1. 10,000
  2. 15,000
  3. 30,000
  4. 120,000

Answer(s): B

Explanation:

The manufacturing overhead rate is $18 per standard direct labor hour and the standard product cost includes $9 of manufacturing overhead per pressure valve. Accordingly, the standard direct labor hour per finished valve is 112 hour ($9 / $18). Therefore, 30,000 units per month would require 15,000 direct labor hours.



View Related Case Study

The Sommers Company manufactures a van ely of industrial valves. Currently, the company is operating at about 70% capacity and is earning a satisfactory return on investment, Management has been approached by Glascow Industries Ltd of Scotland with an offer to buy 120.000 units of a pressure valve. Glascow manufactures a valve that is almost identical to Sommers' pressure valve however, a fire in Glascow industries valve plant has shut down its manufacturing operations. Glascow needs the 120.000 valves over the next 4 months to meet commitments to its regular customers, the company is prepared to pay $19 each for the valves, FOB shipping point. Sommers' product cost, based on current attainable standards, for the pressure valve is


What is the incremental profit (loss) before tax associated with the Glascow order?

  1. ($168,000)
  2. ($120,000)
  3. $552,000
  4. $600000

Answer(s): C

Explanation:

The incremental revenue is found by taking the $19 per unit price and multiplying it by the 120,000 units ordered. Then. the variable costs per unit are multiplied by 120.000 to get a $600,000 cost for materials ($5 x 120.000), a $720,000 cost for labor ($6 x 120,000), and a $360,000 cost for overhead ($3 x 120,000). The variable costs are added to the additional fixed overhead cost of $48,000 (4 months x $12,000) to get a total incremental cost of $1,728,000. Then, the total cost is subtracted from the revenue to get an incremental profit before tax of $552,000 ($2,280,000 -- $1,728,000).



View Related Case Study

The Sommers Company manufactures a vanity of industrial valves. Current', the company is operating at about 70% capacity and is earning a satisfactory return on investment. Management has been approached by Glascow Industries Ltd. of Scotland with an offer to buy 120.000 units of a pressure valve. Glascow manufactures a valve that is almost identical to Sommers' pressure valve; however, a fire in Glascow Industries' valve plant has shut down its manufacturing operations. Glascow needs the 120,000 valves over the next 4 months to meet commitments to its regular customers; the company is prepared to pay $19 each for the valves, FOB shipping point. Sommers' product cost, based on current attainable standards, foi the pressure valve is


What is the minimum unit price that Sommers could accept without reducing net income?

  1. $14
  2. $14.40
  3. $20
  4. $20.40

Answer(s): B

Explanation:

The minimum unit price without reducing net income must cover variable costs plus the additional fixed cost. Therefore, the three variable costs of $5.00 for direct materials, $6.00 for direct labor, and $3.00 for variable overhead are added to the additional fixed cost per unit $40 ($48,000 + 120,000). The total is $14.40.



Page 107 of 336



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