1. Last year a company in NWA had sales of $300,000, a turnover of 2.5, and a return on invest of
47%. What was the company’s net operating income for the year?
A. $62,500
B. $59,200
C. $60,000
D. $56,400
2. Consider the following production and cost data for two products, M and N:
Product M Product N
Contribution margin per unit…………. $30 $42
Machine minutes need per unit…….. 6 minutes 7 minutes
A total of 35,000 machine minutes are available each period and there is unlimited demand for
each product. What is the largest possible total contribution margin that can be realized each
period?
A. $175,000
B. $210,000
C. $150,000
D. $245,000
3. Last year a company had sales of $520,000, a turnover of 1.9, and a return on investment of
27%. What was the company’s net operating income for the year?
A. $140,400
B. $73,892
C. $266,760
D. $60,400
4. Razorback Corporation keeps careful track of the time required to fill orders. Data concerning a
particular order appear below:
Hours
Wait time 15.5
Process time 1.3
Inspection time 0.2
Move time 3.6
Queue time 5.1
The manufacturing cycle efficiency (MCE) was closest to:
A) 0.32
B) 0.09
C) 0.21
D) 0.13
5. Spud Company processes potatoes that it purchases from an Idahoan farmer for $50 per batch.
A batch of potatoes costs $20 to grind into two intermediate products—potato mash and potato
slices—in Spud Company’s plant. The potato mash can be sold as is for $24 or processed further
for $15 to make the end product tater tots that are sold for $45. The potato slices can be sold as
is for $30 or processed further for $9 to make the end product French fries that are sold for $35.
Which of the intermediate products should be processed further?
a. potato mash should be processed into tater tots; potato slices should be processed into
French fries
b. potato mash should be processed into tater tots; potato slices should NOT be processed
into French fries
c. potato mash should NOT be processed into tater tots; potato slices should be processed
into French fries
d. potato mash should NOT be processed into tater tots; potato slices should NOT be
processed into French fries
