Newly Released AICPA Question’s

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  • #2923011
    Joey
    Participant

    I was wondering if anyone knew of a place where I can get some of the explanations for the newly released AICPA questions. There are a few I am struggling with, one of them being:

    Spark Co. buys phones for $125 each and sells them for $200 each. Spark pays a sales commission of $25 per phone sold and monthly fixed costs are $3,000. Assuming Spark desired a profit of 10% on sales, how many units must Spark sell? a) 600 b) 400 c) 200 d) 100

    I know the formula for a desired profit is Total Fixed Cost+Desired Profit/CM per unit. So I thought it would be (3000 total fixed Cost+(200*.10 profit on the selling price of the item))/(Not sure if it would be SP200-25 Commission which is the Variable cost but do you also subtract the $125?). I know this is long but if anyone can help I would greatly appreciate it.

    #2923242
    CPAHOPE
    Participant

    The answer is D

    To do this type of question, you should create a equation to solve
    S-VC-FC = Desired profit

    S-.75S-3000 = .1(S)
    Solve for S and you get 20000 dollars
    20000/200 = 100 units

    VC = 150/200 = .75

    AUD - 39
    BEC - 71
    FAR - 57
    REG - 79

    FAR 57,61,57(why?)

    REG 54,49,69,66, 79

    AUD 39(lol)

    BEC 64,60,50(lol),70,67,71

    #2924043
    CPAHOPE
    Participant

    Your way:
    .1 of sales = 200/.1 = 2000 target profit

    3000+2000 / 50 = 100 units

    Your way is faster but I like to use my way when theres percentage of something involved

    AUD - 39
    BEC - 71
    FAR - 57
    REG - 79

    FAR 57,61,57(why?)

    REG 54,49,69,66, 79

    AUD 39(lol)

    BEC 64,60,50(lol),70,67,71

    #2930739
    JSuzanne
    Participant

    I'm reviewing the same released questions an I can't quite figure out how they are coming up with $27,400 for the following question. Can someone please provide some insight?

    Smith Legal Services has offered to represent a plaintiff in a lawsuit for a retainer of
    $20,000 plus 40% of any award over $20,000. Smith expects to incur out-of-pocket expenditures
    of $15,000 in litigating the suit. Possible court awards with their associated probabilities are:

    Award Probability
    $100,000 0.7
    $0 0.3
    What is the expected value to Smith of the lawsuit?
    A. $25,900
    B. $27,400
    C. $33,000
    D. $37,000

    #2930814
    Icarito
    Participant

    Retainer +20
    Costs (15)
    5

    100 – 20 = 80 x .4 = 32,000 x .7 = 22,400

    5,000 + 22,400 = 27,400

    FAR - 80 (4/1/2019)

    BEC - 82 (9/7/2019)

    AUD - 81 (11/23/2019)

    REG- March 9, 2020

    #2932068
    JSuzanne
    Participant

    Thank you so much, Icarito!

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