1) A local toolmaker makes the best hammers on the market.

The head of the hammer costs

$12.11 and the handle costs $4.37. It takes 1.4 minutes to assemble the hammer and the hourly
cost is $90.00 for assembly time. The company has fixed operating costs of $22 310 per month.
They sell the hammers for three times their total variable cost. The company wants to make a
monthly profit of $5000. How many hammers must they sell?

A) 796

B) 735

C) 776

D) 766

E) 768

Answer: B
2) A company that makes cell phones has the following cost structure. The have fixed costs of
$145 000 per period and manufacturing costs of $15.16 per cell phone. Advertising is expected
to be $25 000 per period and a special promotional contest will involve providing a free case for
a cost of $5.30 per cell phone. Each cell phone sells for $49.95. What is the break-even point in
the number of phones?

A) 4886

B) 4917

C) 4168

D) 5765

E) 4240

Answer: D

3) A local college hospitality restaurant has the best meals in town. The average variable cost per
meal is $10.25 and the desserts are $1.25. The restaurant has fixed operating costs of $110 500
per month. They sell the meals and desserts for three times their average variable cost per meal.
The college wants to make a monthly profit of $50 000. How many meals must they sell (Round
up to nearest whole meal)?

A) 4805

B) 6979

C) 6500

D) 8405

E) 9769

Answer: B