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Summative

This linear programming problem involves maximizing profit (CM) given constraints on two independent variables (X and Y). The feasible solutions that satisfy the constraints are X=0 and Y=400. Once the break-even point is reached, the company will make a profit of $3 per additional unit. Statements A and C from the response options are true.

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Nelzen Garay
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55 views

Summative

This linear programming problem involves maximizing profit (CM) given constraints on two independent variables (X and Y). The feasible solutions that satisfy the constraints are X=0 and Y=400. Once the break-even point is reached, the company will make a profit of $3 per additional unit. Statements A and C from the response options are true.

Uploaded by

Nelzen Garay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1. Consider the following linear programming a.

Each unit "contributes" $3 toward


problem and assume that non-negativity covering the fixed costs of $900.
constraints apply to the independent b. The situation described is not possible
variables: and there must be an error.
c. Once the break-even point is reached, the
Max CM = $14X + $23Y company will make money at the rate of
Subject to $3 per unit.
Constraint 1: 4X + 5Y < 3,200 d. The firm will definitely lose money in this
Constraint 2: 2X + 6Y < 2,400 situation.
e. Statements "A" and "C" are true.
Which of the following are feasible solutions to
the linear programming problem? 7. Sanderson sells a single product for $50 that
a. X = 600, Y = 240 has a variable cost of $30. Fixed costs
b. X = 800, Y = 640 amount to $5 per unit when anticipated sales
c. X = 0, Y = 400 targets are met. If the company sells one unit
d. X = 1,200, Y = 0 in excess of its break-even volume, the
bottom-line profit will be:
2. A company produces two products that are a. $15.
processed on two assembly lines. Assembly b. $20.
line 1 has 100 available hours, and assembly c. $50.
line 2 has 42 available hours. Each product d. An amount that cannot be derived based
requires 10 hours of processing time on line on the information presented.
1, while on line 2 product 1 requires 7 hours
and product 2 requires 3 hours. The profit for 8. A recent income statement of Fox Corporation
product 1 is $6 per unit, and the profit for reported the following data:
product 2 is $4 per unit. How many product 1
and product must be produced to maximize Sales revenue $3,600,000
Variable costs 1,600,000
profit?
Fixed costs 1,000,000

3. When 10,000 units are produced, fixed costs


are P14 per unit. Therefore, when 20,000 If these data are based on the sale of 10,000
units are produced fixed costs units, the break-even point would be:
a. Will increase to P 28 per unit. a. 2,000 units. c. 2,778 units.
b. Will remain at P 14 per unit. b. 3,600 units. d. 5,000 units.
c. Will decrease to P 7 per unit.
d. Will total P 280,000 9. Green, Inc., sells a single product for $20.
Variable costs are $8 per unit and fixed costs
4. What is the breakeven level in batteries, total $120,000 at a volume level of 5,000
assuming the selling price goes up by 10%, units. Assuming that fixed costs do not
fixed manufacturing costs decline by 10%, change, Green's break-even sales would be:
and other fixed costs decline by P 10,000? a. $160,000. c. $200,000.
a. 1,300 c. 608 b. $300,000. d. $480,000.
b. 1,377 d. 769
10. Orion recently reported sales revenues of
5. Cupcake Company is contemplating of $800,000, a total contribution margin of
marketing a new product. Fixed costs will be $300,000, and fixed costs of $180,000. If
P 800,000 for production of 75,000 units or sales volume amounted to 10,000 units, the
less and P 1,200,000 if production exceeds company's variable cost per unit must have
75,000 units. The variable cost ratio is 60% been:
for the first 75,000. Contribution margin a. $12. c. $32.
percentage will increase to 50% for units in b. $50. d. $92.
excess of 75,000.

If the product is expected to sell for P25 per


unit, how many units must Cupcake
Company sell to breakeven?
a. 99,000 c. 111,000
b. 105,000 d. 106,000

6. A company has fixed costs of $900 and a per-


unit contribution margin of $3. Which of the
following statelments is (are) true?

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