Woodsman Inc produces a variety of wood finishing products including gallons of varnish that it manufactures and packages under its own name. The company has computed the required production of gallons of varnish it will need for the first three months of 2013 as follows: January 300,000 gallons February 340,000 gallons March 400,000 gallons Each gallon of varnish requires 10 ounces of a special
chemical. This chemical costs $.25 per ounce. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month. The cost of the direct material that should be purchased in February is:
A) $920,000
B) $950,000
C) $880,000
D) $850,000
C
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Sutton Products is a price-setter that uses the cost-plus pricing approach. The products are specialty vacuum tubes used in sound equipment. The CEO is certain that the company can produce and sell 310,000 units per year, due to the high demand for the product. Variable costs are $2.40 per unit. Total fixed costs are $970,000 per year. The CEO will receive stock options if $100,000 of operating income for the year is reported. What sales price would allow the CEO to achieve the target if the cost-plus pricing method is used? (Round your answer to the nearest cent.)
A) $2.40 per unit B) $5.85 per unit C) $3.45 per unit D) $5.21 per unit
The product cost concept formula for the markup percentage is ________
a. Total costs / Desired profit b. Total fixed costs / Total variable costs c. Total variable costs / Total fixed costs d. Desired profit plus total selling and administrative costs / Total product costs
An engagement letter is a written contract
a. between an accountant and client. b. in anticipation of marriage. c. between a corporation and the AICPA. d. intended to create a fiduciary duty of an accountant to his client.
In an attempt to limit the power of large purchasers, Congress amended Section 2 of the Clayton Act in 1936 by adopting the:
a. Sherman Act. b. Federal Trade Commission Act. c. Robinson-Patman Act. d. All of these.