Question 1

A mail-order confectioner sells fine candy in one-pound boxes. It has the capacity to produce 600,000

boxes annually, but forecasts that it will produce and sell only 500,000 boxes in the coming year. The

costs to manufacture and distribute the candy are detailed below. The organization has invested

capital of $6,750,000.

The confectioner has been asked by a retailer to submit a bid for a special order of 40,000 one-pound

boxes of candy; this is a one-time order that will not be repeated. While the candy would be almost

identical, the candy ingredients would be $0.45 less. The total distribution costs for the entire order

would be $32,000. Special setup costs required by this order would amount to $60,000. There would

be no other changes in costs, rates, or amounts. The minimum selling price per one-pound box that

the confectioner would bid on this special order would be

Options :

A : $7.05

B : $8.85

C : $9.05

D : $9.55

Answer: A

Question 2

A firm has daily cash receipts of $100,000 and collection time of 2 days. A bank has offered to reduce

the collection time on the firm’s deposits by 2 days for a monthly fee of $500. If money market rates

are expected to average 6% during the year, the net annual benefit (loss) from having this service is

Options :

A : $3,000

B : $12,000

C : $0

D : $6,000

Answer: D

Question 3

Which relationship marketing level is appropriate for a low unit profit margin and many customers?

Options :

A : Reactive marketing.

B : Basic marketing.

C : Partnership marketing.

D : Proactive marketing.

Answer: B

Question 4

Motivation is the

Options :

A : Desire and the commitment to achieve a specific goal.

B : Sharing of goals by supervisors and subordinates.

C : Extent to which individuals have the authority to make decisions.

D : Extent of the attempt to accomplish a specific goal

Answer: A

Question 5

The difference between the sales price and total variable costs is

Options :

A : Gross operating profit.

B : Net profit.

C : The breakeven point.

D : The contribution margin.

Answer: D

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