1.

Burch Company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash
disbursements. Burch Company maintains a cash balance of $10,000 at the end of each month. The firm has an agreement
with its bank to borrow or repay funds necessary to maintain the required ending balance. As of May 31 the company owes
$15,000 to the bank. The balance of the loan on June 30 will be:
a. $7,500
b. $12,500
c. $17,500
d. $19,500
e. $25,000
2. A retailer, in business for over 50 years, has developed the following regression model from the past 60 months of
operating data:
Monthly sales dollars = 50,000 + 4.70A+30B -1,0000X
Where:
A = number of customers
B = advertising dollars in month
X = 1 if a winter month
X = 0 if other months
An appropriate interpretation of this model is that:
a.
the business is seasonal, generating higher sales in winter months than other months.
b.
advertising is not cost effective.
c.
within the relevant range, each additional customer will make a purchase of $4.70 on average.
d.
sales are always expected to be at least $50,000.
3. A firm derives the following cost relationship from a regression analysis of monthly manufacturing overhead cost:
C
C

=
=

$80,000 + $12M
monthly manufacturing overhead cost; M =

machine hours

The standard error of estimate of the regression is $6,000. The standard time required to manufacture one 6-unit case of the
product is 4 machine hours. The firm applies manufacturing overhead to production on the basis of machine hours; normal
annual production is 50,000 cases. If scheduled production during April is 5,000, then the estimated variable manufacturing
overhead cost for that month is:
a. $ 80,000
b. $240,000
c. $320,000
d. $360,000

4. OutlyTech Corp. expects to sell 24,000 telephone switches. Fixed costs are $12,150,000; unit sales price is $4,190; and unit
variable costs are $1,440. The firm's margin of safety in sales dollars is:

a.
b.
c.
d.

$71,108,113
$76,577,990
$82,047,826
$87,517,661

Please answer questions 5-8 using the following information:

Daley Company manufactures computer monitors. The following is a summary of basic cost
and revenue data.
Per unit
Percent
Sales price

$580

100

Variable costs

(348)

(60)

Daley is currently selling 700 monitors per month. Fixed costs total $96,000.
5.

The breakeven point is:

a.

276 units

b.

414 units

c.

420 units

d.

440 units