# 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

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

.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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