1-

r. r;rrr"se: i*r,f
i[[rftgel"irrlr t . c c c i i i i r i n g& Control

A. . i\rr.$iri .fi
l\{[,Li:

r -
_'Tg1l r
- ,'{gt}trr .
v

Lec{uret : I}rof.i}r,"ft4qiFeaKsed
y*,lssef

2{}05
 I
l. f C _ e n c r 'l a
l ol s p i t e ll t a sc v ei l l i v a n i i b l cc o s t :oi l ' 7 5 ; . r c i . c coi tl 'tt o r a lrevenLles
j r
-l-here and fixecicosts
/ \
t o l $ 5 0 r n i l l i o nt ) e ry e a r . a r c5 0 . 0 0 0[ ) a t i c . r - d a c\ ss r i m a r eldbr ncxt
:t\
nr
Ai 1,g3p.
| -. {-- ,t:/
\v l ra t i s th e b i -.:a k -e rr r,ep o i rrtexpressecl i n totalrcvcnue,/ // /-
( : t , J $ 2 0 0r n i l l i o n ,I . 2 FC
f
t i ! . " | ._
D. b)U ntrllrorr (- l-t i'
..'' t \ / - .

c . ) t . z . )r n r l l r o n
r(7
d . n o r r co f ' t h ea b o v e

=. Zoar,-olOcz
c :l :l o l l ' l o s p i ta l ta so v c l a i l vari abl ecostsof 75 percenr
' l ' h e re of total rcvenuesand fi xecicosts
o f $ 5 0 r.!ri l l i o n
p e r y e a r' are 50.000pati crrr-da),s
csri matedfor next vear.

\\'hatis theaver.age
dail1,
i ' e \ /cl tue
pcr pati cntneccssaryto br.eak_even?
a . S1 , 0 0 0
v t (-u)
-.t. $4,ooo
$2s0
d. s25,000 ;l - ) : - ' 4 i/c,'L.
? s<,^1

S u p P J sacS u p c t ' 8
t t i O t ci tl a sn t t r r u il l lx c r ci o : ; i ar ;1 : p l i c a bl ol ci t sr o o p r s . f
its 300-roottt $ 1 . 2i , i l l i o nj o r
ntotcl,avcragc tlailyroonlrentsof s50,arrcJ avcrage
' forcacrrroomrenrecf. variable c-oliioTv' ':y sro
It operarei 365cr.i,sp'er;,cai.
i.l ,:-i,r ;;:vvJ' r
Hotvmucltnetinconre on i-oonrs rvillbc ilr.:rreratc,J '
if-thcnrotelis cornpletely full- ,
ll]'1lilil'n:iffi"''cv'r:'rr'/ -.i: ,'{'c.y)t:,
i ,,,, \ t, \:',)'i.':;kt,i.*,)
tr. :f,,r,ili,tl0o''
!i:,)$3,180,000
cl, $5,475,000

v ,A ! u q R o s e aS u p e r8 r n o t e l L a sa n n t t aflr x e dc o s t sa i r n l i c i t b lteo i t s r o o n l so f $ 1 . 2n r i l l i o nf o r
i t s 3 0 0 - r o o mm o t e l ,a v e r a g e
fo r e a c hro o m re n te d ,It o p e rates
c i a i l l ' r o o r rf ie n t so 1 - $ 5 ra. )n. da v e r a g ev a r i a b l ec o s t s
365 dai ,spcl -l r,ei r.
ol $10

Horvnruclrnetinconre 0n i-ooll.ls
r v i l lb eg c ' c r a t c i fl t r r er r o ( c li s l r a l f l l l t h r , ; u g h otul rte
e n t i r ey e a r ? 'iC)
,i ,-t .)i i ,., L,t ,t' ,'.:i,1,' )-- t -,.) ..^.4 ./')"1
,<r' r,'
a . $ (1 , 1 9 2 , 5 0 0 ) i .
,t' | .. Ll

b . $I , 5 9 0 , 0 0 0
g. $2,737,500
d.) 5999,96()
 I ) r c s e t l t rb
- -er li c r t ' i st l i c l - , i o c r . r c t ri ci a, rt tui ' c rt l i c l l i ' s ts i x n 1 e r r t [ os i t l r c y e a rf o r t h e
t t t i x e dc o s t si n c L r r r ebc1l ,C o r r g a r eCeo r n p a n r , .

, ,- Morrth
/ I.i) eps Units
Januar-.y
:. SI.SOO ',r r.- {,00-0''
Ij c[rn ra ry 8.250 6,500
lr4arch 10,500 3,000
!. April
, l2'7qq 10,500
N,lay 1 3 . 5 0) 0 ;
, 1i,g-oo
J l rn e 10,950 9,000
C o n g a r e cC o m n a n l , u s ei sh eh i g h - l o rrvr r e t l r ot c
d a n a l ; , 2l n
c i.red costs.
\\/l ra t\\,o u l db e th e to ta lc o s a
t t a r ro p c r a t i nlge reI o f 1 0 , 0 0u
0i r i t s ?
(a;,;sl2,ooo . / l
( !:; €?'tr
\t b . s1 2 , 5 0 0
c . $I 1 , 8 0 0
4... "
d. $11,725

'l'hc
f o l l o r v i noga t nh a sb c c na s s c r n b l cf bcri A P \ / a l c r i t i n c
C o r r r ; > a n yU. s et h el r i g h _ l o r v
nrctlrod,

Cost litlrti
i
$221,400,t l,(i0()
34,000 2,001)
31,290 2,450
36.400
---!-.-.<
3,000
(.
-y')9s; 3 , 9 0 0)

v Wharis rlrevariabie
costperlrour? t l
't'4
a . $1 . 5 2 it'
b . $t . 8 4 '": l/t'

? ) $r c . 4 a
r'-d,
$g,64
 t l r c f o l l o u ' i n gi r r f o r r i r l t i c ri rc g i r r t l i r ri g
t s r i n cr . , ; rocnl i . r , p r o c i u c t .

F ix e d rn a n u f' a c turrri g c o s ts '-)

$420,000
F i . r e ds c l l i n ga n d a c i n r i r r i s t r ' : tct io, ,s,tcs j
-.
80,000

V l r i a l r l er l a n Lttj r c t u ri ti1 1c o s t s
1 . 0 3 0 . 0' .0ir 0
V a r i a b l cs e l l i r r ga r r da i n i r r i s t r a t i v c r i s l . s
1 2 0 . 0 0-0/
S c l l i n gu n i tp r i c e
100
(/ - '
i'
l
'tt
t J r r i t sp r o d u c e da n ds o l c l 1n nnn

7. ''Vlat is theunirc o s to f a r o l l e r b l a dLer s i ntgh ei i i l l

a ,: i - 5.15 0
b .$ s 7 . 5 0
v c .S 7 8 . 5 0
r'd.)sz.so
tt

. -''

F r i t t . i l r c .p i ' o v i d c dt h c f o l l c r v r i r ti n
g f r r r t n i r t i rr;'n, ; r r l r c J iint .gso r r r i:l n r it i r r l l , i r r . t l t l r r c t .
rollcr:lir:ics:

F i x e d n l A n ul a c ti rril tg c o s ts
$420,000
F i x c ds c l l i n ga n c a l d n r i l t i s t r ; r t icvor :. s i . s
80,000

\ / n ri i r I r l r r: r a i r t r J l ti.r,rtgr;rurs t s
1,030,000
V a r i a b lsee l l i n ga n da d r : r i r - r i s t r actoi v: ;et s
120,000
S e l l i nu g n i tp r i c e
100
Unitsproducecl
anclsolcl 20,000
Whlt is thevariable
costperrrnitof a rollcrblacle
u s i n gt l r ec o n t r i b u t i uanp p r o a c h ?
a .$ 51 . 5 0
'il$sz.so
c , S fA . S O
d .$ 8 2 , 5 0

: : r .

' ::-l
' 1 . . ' lI

;.':,
ac 4f,.i.

:..
 l v l r i n t r i nCgo r p o i ' a t i o
I rral sL ' ' c cpnr o d t r c i nagr r ds el l i r r g- i 0 . 0 1 p1 a0 r s .l-he
c oili i..t t1.v,h r i st h cc a p a c i t l ' t p a ),car.
or o d u c5e0 , t j c 0i r a r ri si , i t l r .
i t sJ l , , , , , cirarcr i l i t i c s .l . l r c
f o l l o u ' r , ri n
g f r ; r n t a t i iosrar l s oa v r i l a b l c :

S c l l i n gp r i c ep c r u r r i r
V a r . i a b lceo s t sp e r u r r i r : $30
l v ,l a rrl r tu ri l tg
f l rc
S e lI i r r ga n d A d n r ir r i s r r . 0 t i v e l i - , t 6
, r-.r'
-
F i .re dc o s tsi n to ta l : ) -
lvlarrulacturing
S c lI i n g a n c il \ c l l n ri r i s t n r t i v e $ I 2 9 , 0 0 0r
j
v 9 . \ \ / h: r ris t ir e v a r i a b l ec o s tp e r u n i t
56,000
f o r a p a n u s i r r itrh ec o n t r i b u t i o a
nppr-oach'/
a .$ 1 7 . 4 ( r
'(. $tf oc,
iu';
s22,$
d,s,252fi

'/ irlirrni.ng
corporatio. hasbeenproducing ser!i'g,i(J,riOc
arrcr pa'sa
),ear.l-he
I :o,TFu:tyhas the"ca;.:;;y
to procluce
so,ooopans*,irlrirsprc.scnr
ft'llorTisii, iiciliric,s.
Tlrc
,^,X irfrrrrrrrrtiirrr
ir;irl,so
nvnilltrlci
L/,\ f
i
/ Sclling
,t, / l r r i c ep e ru n i r
V a r i a b l ceo s t sp c ru n i t : $30
/
\t J / Manufacturing
S c l l i n ga n cAl i n r i n i s t r a r i v e
I r i x e dc o s t si n t o t a l :, 5 . : J

\7 J:il'ili:ll'Ialui,,i,,raii,,e $l 2 g . 0 u 0
56,000
l 0 ' w l ' a t i s t h ec o s tp e rc a pu s i n g
t h et o t a li n a n u l a c r u r icnogs ra p p r o a c h ? t r f
ir v'-l t 2..,
a.$ I6.(,,0
b ,$ 2 0 . 0 0
''0st+.:'o
Y .st e . : o

.A t '
 L
i lr I ) c : , i i n n t i . irlror l c l so i . . . , 1 . 1l i, .i c0^0 - l c o l l t
1 ; i o l t iti . , i r t i t l o c a r i op
r ro p r r l af or rs p r i n g
br e a k e rsO . c c u p a n c )' ra te s;i v c t.a fl()5oto
r,\ \ 'l'lrt-'
tl.a\ e i n N{arch illt(i qfj-.,,o in ,{pril. avcraLtc roont
!..v r c r i t a il s $ 1 5 0p c r r r i g l r t[.: x p c c r c st la l c .lsi l r ,,\
llri I I re :
-:\

( a.i $405.000 'r -('

I l,' , t'
t t . '
i l ' , i 1 , )
U. $ 4I 8 . 5 0 0
(:. $ . 17 2. 5 0 0
( l
$ 4 4I , 7 5 0

/ tl c s ti rrl ti o rrl -l o te l so p r:ra i cs

a 100_r o o n l p r o l ; c r - t yi n l i i o c a t i o np o p u l a r
brcake.rs._Occrrl.rlrlrcy riitesityer.agc forspring
95% in lr4archaiitl 9[i9.t :rr A pri l . -i -he
r er r ta il s $ I _ 5 0p e r n i g h t.E x p e c i e ls al e.s averageroont
for It4ay arc:
,
,..i-
/,
) i' :'t t')' "
$,i05,()00 fr#*gr

b. $ 4 19 , 5 0 0
v $427,500
$ 4 41 , 7 5 0

U r r i ts a l c st , f [ ) r c ; t l r r.c] it: t r . c
c r J r r c l . l illtl ), . t ) i ) i ir,, i r i i i l l l t si i l c.s
ly:c
1::i?1.:,'0f tto,r.*i
i,''i'r',,,
" irr',i,. :; ; ;::;;:;' ;,, ii;' f b r c c l s t
r_rl ' l )rodtrct y arc
[)roduct
X irrcrease
byr0percerr.'.,.j b c , a s s u r n i nsga l c so l -
,i,.r.,ir[,:.1*,, g o u p b y 4 , 0 0 0u n i r s ?
10,000 and20,000 units. ' )
t'cs pecti',,e
ly -:
b. I 1,000and22,000 unir,;. respe ctively
| 1 , 0 0i 0l n (1l 4 , 0 0r0r r i i rrr:l:llrc
, ; , ti\,01,y
il, Jji,()()()
rrnils

v
 t l i n t i t c d ,a i v l t o l e s a l el r ,a sa s a l c sb u d g c tt b r r r c i : it t r o r r r o
l tl ' S - 1 0 0 . 0 0 0C. o s t o l '
p e c t c dt o b c 4 0 p e r c e not f s a l e s .A l l u r r i t sa r - cp i i i dt b r i r r l h c ' rrrorrtS
I t a s e .T h c b e g i n n i n gi n v c n t o r yo f u r r i t si s $ 1 0 . 0 0 Cu, n c a j n crrdirru a r r r o r r rorft
r e d . B e g i n r r i nagc c o u n r1s r a 1 , a bi sl e$ 7 6 , 0 0 0 .
'l'he -..!, !
er r d i r rbge l a n cien r i c c o r r nptrsl , a b l e
f b i n c . \ ,n1i c n t hr ri l l t r c I;',',,ii'i'/:*
a . $1 2 2 , 0 0 0 . '
b. s120,000. ji'.
c. $118,000.
d. $78.000.
r, rt/1
\t,'j' f i t

/
l 6 ' l { c b b i eU s n l i m i i e cal ,r v l t o l c s a l lei iri,sa s a l c sb u i l g cf-'rc rrrr c x il i r o r i t o h t ' S - 1 0 0 , 0 0C0o. s to l .
/
u n i l ss r ' l di s c x l t c c t ctdo l r c 4 0p e r c e ror lt' s a l c s,., \ l lu n i t sa r cp : : i .i i i r i ' l l i c
,/rl\ rno'tlr
p u t c l t a s c' l,' l r eb e g i t t n i ni rgr r , c n i 0or '[y' u n i t si s $ l t ) . 0 { ] rt.r)r,r lr l r
VS\ f- :, ' -i ',,-;.'): C
' ni sgc l e s i r e dL.l e g i n n i n g c r r d i r r*gr'ourrt,of
/ a c c o L t npt,s_ r ; , l bi sl c$ 7 6 , 0 0 0 .
/
J l l o r vr n u c lcr a s lrt i ' a sr r s c d
t o D a ,avc c o i r n lt xs r v a l ; ilcb r r i r cr r r o r r t l r ?
a . S1 2 2 , 0 0 0 .

i flliisS:
cl. $75.(J()0,

/
/
l7"J'raynect
Company. hasa prociuctiott sciieclule of g,000ru;i!:r arrcl a bucigerecl salesvolumeof
// / l t 0 , 0 0i0l i l i t :f,t ) rl l t r t: : t r r r . ,.,\r,rrt. . ;lir!r.n, t L l i t i u r,i1, , ( ) 0, rUr i i t iu, r ci r rt r c g i n r r i r r l l
,|
I ' I
\\
\ \
, lirtl:,lr1 f r :1t lt " r rl tl r: ;v c t r { n r r , .
t a t \ \ t
t r\l \J I

\'/ I-lorvman,v unitsareelipcrlieci

to be in cirdirrgi^lrrislrcti
ggodsin'c'tory?
a . I 0 , 0 0 0u n i r s
b , 7 , 0 0 0u r r i t s
c - : J , 0 0 0r r r r i t s il : i'
!;
'rrrits. j , ,t it
.,,'d. 1,000 i l
t - " (

Bur:oughs
Company e.xpectcd to produce17,000 units.l]egirining finislred goocls i'ventoryis
2 ' 0 0 0u r r i tas n de x p e c t c d . s aalrces1 8 , 0 0 0 d c t i nfgi n i s l r egdo o d s,
r r i l i r i .E x J r e c r e n
invcntorfis ..
a. 37,000urrits \) .{ i i ;
b. 3,000units
c. 2,000units
{
t d. l,o0ounits

; 'r

::':
.- 4., i
' ) . a i::r
r

, i
 L c ;-i ,o rl ti c l rr
I ra stl i trl o l l o u i i rg s i l c.strucl ge
t I o r t h e i l : r is i , rr r r o n t h s
of20Xl:
Jul;, $100,000 Ocrobcr. $90,000
Atrgust 80,0c0 N o,,' enl bcr 100,000
S c y rtc rrrb
i' e I i0,000 D ccci l[;er 94,000
I-l i s to ri c a l l ltl' ,rcc a s rrc .i lccri o' of
.sarcs
rrasbccrras ftri l .* ,s:

65 p e r c e not f s a l c sc o l l e c t e d in nrorrto hf.sale

25 p e r c e r to f s a r c sc o i l c c t e ci iJr r ' . ' i h
r b i l o u i n ss a r e
B p c rc c rrr.o r' s a i c sc oi l ectec.r i rr secancr r;rc;rtrr tbttorvi ngsare
2 p e r c e not f s a l c sa r e u r r c o l l c c t i b l e .

\\rh a ta rc th e c .rp ec te c ,:a:i

i iccl
r l ccti crrs
a, $5fi,500. '
, l L I

b .$92,400.
.) / ."t
\t c. . 5,(tC).
$99,500.' t
cl. $88,200. 7 -J .i., ot:'
'8
' ,f r:r;:'
t\"r)'nc
C o r:rp rrril;,
r;rstl rc fb l l o rv i ri lrj
; ri ;t;

lvlrirLilr | r'
ilidtlt.tr:rl-.irlq-.1
Janua,',r,
FcL',ruery
$iiis,occ $ ,f
i32,000 3.;.
I\4ar-ch i,1.1.000 ,,,!n
A l ri l ,.<
ll(),()i)()
'l
l r cg t ' t x ;l .)sr U t inl r l ci s , i 0
i;ct.r:cu
r irt i,dt l r cr r r v c ; : t Ll)i rl.lyr cc r r dt i l . l _ t c c e r r r b e r
$ 1 e , 0 0 0D' e s i r eidr r v c : r i oiicyv e r ;s, ; vlrs
l;;,;;;;;;;:i,,.,rr r,o^th,sares
a rL o s r ,
W h a ti s t h cc x p c c t ctrol r l lpti rcl nsc.s
trtrcl gctcci i i i r i rri rrrrar;,?
a, $105,120
b,
v -c. $79,200
$ Bt . 3 d 0 - - J i ' . .

d.'$52,E00
- / .

.'r- i 1
n

t \ \ ' o i ) o t c n t i a li n t ' c s i l t i e n at i t c r r r a t i v e s ;

6t I r r i t i a cl a p i t a iln \ / c r . s l n r e r j t
E s t i r n a t cuds c l i r l i i e
I l s t i r n a t etde l ' r l i n asl u lv a g cv a l L r c
E s t i r n a t eadn n u a sl a v i n g si n c a s l t
ollcrating costs
eiss A
st80,000
3 5,rs.
-0-

$75.000
CaseB.

$270,000
3 yrs.
-0-

$ I 20.000
Mirrirnurd n c s i r c crla l co f r c t u n l l 0 percent | ? percent
A s s u r n cs t r a i g l r t - l i rdr ce p r - c c i l t i oi rnra l l c o t ' i I ) u t a l i o n s .
a r r d i g r r o r ei n c o m e t a x e s .

- ' l - h er r e tp r e s e nvt a l r r ci r rc a s cA i s
a. $6,5I8, , il
\ rP ,'';..'
b. $(t2i,652).
v c. $75,000,
cl. $186,518. '.-/.

L , r : 1 9a
1 rvc t \ , , , o
g r o i c r t t i iar lt v c s t r t t c r t L ' l l c r ' n t i ' c s :

l.ir.tsA. egse_8.
I r r i t i acla p i t ai rl r v c : ; r r r r c r i t
$t80.000 .$270.000
I l s t i n r a t cr r sJ c l i lrili b j .l,r.r.
I i l ; l i r r r t r tl c n
r lt I i r rri ;rrI i I v l l\l ,(l:l u \ , 3 yr.s.
-o- .0.
l ; : , l i r n n l lendl l t , r l t r v i t u li tr rr : r r l , l ;
ol)crating co.sts $ 7 5 , o o o $t 2 0 . 0 0 0
Minirrrunr desirecl rur,,r of return l0 pcrcelrt l2 pe.,:ent
Asstrrnc
strniglrt-li rrcclel:r.r-c
i ationi rr ;rIi c o r r i l t r i iircr l r r st r, r r r l igrrorC
i t r c O n rl eA X e s .
'l'he
n e tp r e s c nvta l u ci n c a s c[ j i s
v .a. 120,0_Q0.,
$
. b $t 9 . 2 1 6 . . , :
c. S(492).
d . $I 9 4 , 5 9 4 .
 t lr a tt i i e d e s i r e dr a t eo f r c t u r t ti s l 0 % a n dt h a ti n t c r c s its c o r n p o r - r n dacrcr lr r r . r a i l y , .
I - { o r vl t t t t c l m
t u s tb e i n l ' e s i c dt o d a yi n o r c J et ro l r a v cS i 0 , 0 0 0i r r 5 1 , e a ras r r cil0 ; , e a r s .
r c s i r c ci vi cI i ' ?
a . $ 5 , 0 0 0$; I . 0 0 0
b . - $ 1 , 7 9 ;1$ ( ; ,I ' i 5
(. c . $ 6 , 2 0 9 ;$ 3 , 9 5 5 - . ,
d . $ 1 , 0 0 0$; 5 . 0 0 0

a t t n r r a lc i t s l r i r r l l o r v s l t r r p r o j c c t s A a r r c lI J a r c g i v c nb e l o r ' , , .

YeQL A I ]
I ${O,rro(i s:tlJruu
2 30,000 10.000
.|
3 2A,A_0! ra,g(la
$_lQ=QJ!o $.! Qg,qgIl
A s s u m i nag h u r d l er a t eo i i 2 o / 0i v, r r i c rprr o j e cits r n o r ed e s i r a b l c ?
a. ProjectA is rnoreclesirabic, -
-
b . 1 i ' ' o l c cl -t]i , , n o r cd e i i r a i , .l e
c . [ ' r c r j c cAt a n d[ 3a r ee r p r t r l l i , d c s i r a b l c .
d. cannotbedetermined frornthei'forrnatio,Abi,r,,:.

n n r l n r l r r c i t ttlJ. ie c i p i t ri r ri 'sct r v r kr c y { t r l ) c c lisi l 'u r r p i t tlirl r r t l l i c l i r r g .

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i t r v c s t i ndgc c i s i o r i s
D i s c o u ndte c i s i o n s
Pay'back dr:cisions

aredecisions
on rvhether
to acquire
anasset.a proj ect,a companyor
a p r o d u clti n e .
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Invcstnrcnt dc.cjs io11s
d . I'at'back decisions

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