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Assignment #4
Question [10 marks] Pgs. 128 129: Review Exercise Q #14
Solution:
Thethreecompaniesareinsured;12 13
25
Firstcompanyinsured = 12 $185000 = $92500.00
Secondcompanyinsured = 13 $185000 = $61666.67 Thirdcompanyinsured =
25 $185000 = $74000.00
Three companies insured: $ 92 500.00, $61 666.67, $74 000.00
respectively. Q #18
Solution:
TheratiooffacultytoSupportstaff = 5: 4 Given,
thereare192supportstaff, then;
Faculty = 192 54 = 240
AllemployeetoFaculty = 49
Then, allemployee = 240 94 = 540
Hence, thecollegeemploys-./012345006.
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Question [4 marks]
Solution:
1 Pound =0.4536 Kg In United States, 1 pound lamb chops cost
US$4.25 1 Kg cost=
$4.250.4536 = $9.37perKg 1USD = $1.0157CAD
9.37USD = $1.0157 9.37CAD = 9.52CAD Moreexpensive = C$10.00
C$9.52 = C$0.48
Hence, they are >$/. .? more expensive in CAD. Question [10
marks] Pg. 124 Ex. 3.8 Q # 2 only part b) i.e. find & interpret
price indexes for silver only
Solution: (b)
2004 2005 2006 2007 2008 2009 Silver price per ounce
$6.6711 $7.3164 $11.5452 $13.3836 $14.9891 $14.6733
Price index = 6.67116.6711 100= @//
= 7.31646.6711 100= @/A. BCD@
= 11.54526.6711 100= @CD. /BEA
= 13.38366.6711 100= E//. BE/B
= 14.98916.6711 100= EE.. B?C@
= 14.67336.6711 100= E@A. A-DE
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Solution:
ValueofportfolioonJanuary6, 2010=
CompositeIndexon2010CompositeIndexon2009 Valueofportfolioon2009
=$11944.54$9472.09 $279510
= $352469 ValueofportfolioonJanuary6, 2010 = $D-E.BA
Question [8 marks] Pg. 189: Ex. 5.2 A
Solution:
(a) Contribution Margin ContributionMargin = Revenue
Variableexpenses
= K$100 $38L = $62
(b) Contribution rate
ContributionRete = UnitContributionMarginUnitSellingPrice
=$0.62$1 = 62%
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(c) Break-even point in units
Break evenpointinunits = FixedCostUnitContributionmargin
= $720$62 = 11.61
Break-even point in units =12 unit
(d) Break-even point in sales dollars
Break evenSales = FixedCostContributionRate
= $7200.62
= $1161.29
Question [5 marks] The monthly fixed costs of operating a
50-unit motel are $35,000. The price per unit, per night, for the
next year is set at $125. Costs for the maid service, supplies and
utilities on a per-unit-per-day basis are $12, $6 and $8
respectively. What will be the change in the monthly net income if
the owner reduces the price from $125 to $110 per unit per night
and it results in an increase in the average occupancy rate from
55% to 70%? Assume it is a 30-day month.
Solution: Fixed Cost = $35,000 Cost per unit = $ 35,000/50 = $
700 Price per unit, per night, for the next year = $125 Cost of
maid service+ supplies + utilities = $ 12+$ 6+$ 8 =$ 26 Per day per
unit, total cost = $ 125 +$ 26 =$ 151 Per day per unit, net income
= $700 -$151 = $ 549 30 day net income = 30* $ 549 = $ 16470 For
the whole 50 unit = 50* $ 16470 = $823, 500 Owner reduces the price
from $125 to $110 per unit, then; Per day per unit, total cost = $
110 +$ 26 =$ 136
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Per day per unit, net income = $700 -$136 = $ 564 30 day net
income = 30* $ 564 = $ 16920 For the whole 50 unit = 50* $ 16920 =
$846, 000 Change in the monthly net income = $846, 000 - $823,
500=$ 22 500 Question [8 marks] Pg. 196: Review Exercise
Solution:
(a) Total 80 Jobs at an average cost of $52 each
Breakeven = WeeklyExpensesTotalJobs
= $184080 = $ED Quick print charge $23 for each job to break
even.
(b) To make a profit $1200 Total he should have = $1840 +$1200 =
$ 3040
PereachJobheshouldcharge = $304080 = $D? To make a profit of
$1200, he should charge $ 38.
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(c) He have to sell 90 jobs at $38 per each Job, then;
Totalhecanearn = $38 90 = $3420 ProSit = Totalearn Expenses
= $3420 $1840 = $@-?/
The profit realized = $ 1580
(d) 100 Jobs to sell
Breakeven =WeeklyExpenses
TotalJobs
=$1840
100
= $@?. ./
Minimumpriceitcouldcharge = $@?. ./pereachJob
Question [5 marks] ABC Ltd. manufactured 15,000 units of product
last year and identified the following manufacturing and overhead
costs.
a) What are the total costs for production for the last year?
Solution:
Total Cost for production = $ 50,400,000 + $ 93,000,000 + $
22,200,000
+ $ 16,000,000 + $ 14,200,000
+ $ 19,200,000+ $ 9,600,000+ $ 5,000,000
=$ 229,600,000
Hence, the total Cost for production is $ 229,600,000
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b) If unit variable costs and fixed costs remain unchanged,
calculate the total cost to produce 12500 units this year.
Solution:
TotalCostforproduction
= $50,400,000 T1250015000U + $93,000,000
T1250015000U+ $22,200,000
+$16,000,000 T1250015000U+ $14,200,000 T1250015000U
+$19,200,000 + $9,600,000 + $5,000,000= $42,000,000 +
$77,500,000
+ $22,200,000 + $13333333.33 + $11833333.33+ $19,200,000 +
$9,600,000 + $5,000,000
= $E//, BBB, BBB. BB
So, thetotalCostforproduction = $E//, BBB, BBB. BB
