# Quiz 6: Cost-Volume-Profit Relationships

Business

Q 1Q 1

Incremental analysis is an analytical approach that focuses only on those revenues and costs that will not change as a result of a decision.

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True False

False

Q 2Q 2

When expressed on a per unit basis, fixed costs can mislead decision makers into thinking of them as variable costs.

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True False

True

Q 3Q 3

To estimate what the profit will be at various levels of activity, multiply the number of units to be sold above or below the break-even point by the unit contribution margin.

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True False

True

Q 4Q 4

In a CVP graph (sometimes called a break-even chart), unit volume is represented on the horizontal (X)axis and dollars on the vertical (Y)axis.

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True False

Q 5Q 5

On a CVP graph for a profitable company, the total expense line will be steeper than the total revenue line.

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True False

Q 6Q 6

In a CVP graph, the anticipated profit or loss at any given level of sales is measured by the vertical distance between the total revenue line (sales)and the total fixed expense line.

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True False

Q 7Q 7

A shift in the sales mix from low-margin items to high-margin items will decrease total profits even though total sales increase.

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True False

Q 8Q 8

A shift in the sales mix from high-margin items to low-margin items can cause total profits to decrease even though total sales may increase.

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True False

Q 9Q 9

In two companies making the same product and with the same total sales and total expenses, the contribution margin ratio will be lower in the company with a higher proportion of fixed expenses in its cost structure.

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True False

Q 10Q 10

If the variable expense per unit decreases, and all other factors remain the same, the contribution margin ratio will increase.

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True False

Q 11Q 11

The smaller the contribution margin ratio, the smaller the amount of sales required to cover a given amount of fixed expenses.

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True False

Q 12Q 12

For a given level of sales, a low contribution margin ratio will produce more net operating income than a high contribution margin ratio.

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True False

Q 13Q 13

If fixed expenses increase by $10,000 per year, then the sales needed to break even will generally increase by more than $10,000.

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True False

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True False

Q 15Q 15

The break-even point in units can be obtained by dividing total fixed expenses by the unit contribution margin.

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True False

Q 16Q 16

The break-even point can be determined by simply adding together all of the expenses from the income statement.

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True False

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True False

Q 18Q 18

For a capital intensive, automated company the break-even point will tend to be higher and the margin of safety will be lower than for a less capital intensive company with the same sales.

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True False

Q 19Q 19

The total volume in sales dollars that would be required to attain a given target profit is determined by dividing the target profit by the contribution margin ratio.

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True False

Q 20Q 20

Two companies with the same margin of safety in dollars will also have the same total contribution margin.

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True False

Q 21Q 21

Fawn Company's margin of safety is $90,000.If the company's sales drop by $80,000, it will still have positive net operating income.

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True False

Q 22Q 22

The margin of safety is the amount by which sales can decrease before losses are incurred by the company.

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True False

Q 23Q 23

The margin of safety percentage is equal to the margin of safety in dollars divided by total contribution margin.

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True False

Q 24Q 24

The degree of operating leverage in a company is smallest at the break-even point and increases as sales rise.

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True False

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True False

Q 26Q 26

A company with high operating leverage will experience a larger reduction in net operating income in a period of declining sales than a company with low operating leverage.

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True False

Q 27Q 27

A shift in the sales mix from products with high contribution margin ratios toward products with low contribution margin ratios will raise the break-even point for the company as a whole.

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True False

Q 28Q 28

If the contribution margin is not sufficient to cover fixed expenses:
A)total profit equals total expenses.
B)contribution margin is negative.
C)a loss occurs.
D)variable expenses equal contribution margin.

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Multiple Choice

Q 29Q 29

Which of the following statements is correct with regard to a CVP graph?
A)A CVP graph shows the maximum possible profit.
B)A CVP graph shows the break-even point as the intersection of the total sales revenue line and the total expense line.
C)A CVP graph assumes that total expense varies in direct proportion to unit sales.
D)A CVP graph shows the operating leverage as the gap between total sales revenue and total expense at the actual level of sales.

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Multiple Choice

Q 30Q 30

Which of the following is correct? The break-even point occurs on the CVP graph where:
A)total profit equals total expenses.
B)total profit equals total fixed expenses.
C)total contribution margin equals total fixed expenses.
D)total variable expenses equal total contribution margin.

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Multiple Choice

Q 31Q 31

Which of the following is true regarding the contribution margin ratio of a company that produces only a single product?
A)As fixed expenses decrease, the contribution margin ratio increases.
B)The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit.
C)The contribution margin ratio will decline as unit sales decline.
D)The contribution margin ratio equals the selling price per unit less the variable expense ratio.

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Multiple Choice

Q 32Q 32

Mossfeet Shoe Corporation is a single product firm.The company is predicting that a price increase next year will not cause unit sales to decrease.What effect would this price increase have on the following items for next year?

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Multiple Choice

Q 33Q 33

If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit, the break-even point in units will:
A)decrease.
B)increase.
C)not change.
D)change but direction cannot be determined.

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Multiple Choice

Q 34Q 34

Break-even analysis assumes that:
A)Total revenue is constant.
B)Unit variable expense is constant.
C)Unit fixed expense is constant.
D)Selling prices must fall in order to generate more revenue.

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Multiple Choice

Q 35Q 35

Which of the following would not affect the break-even point?
A)number of units sold
B)variable expense per unit
C)total fixed expense
D)selling price per unit

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Multiple Choice

Q 36Q 36

A $2.00 increase in a product's variable expense per unit accompanied by a $2.00 increase in its selling price per unit will:
A)decrease the degree of operating leverage.
B)decrease the contribution margin.
C)have no effect on the break-even volume.
D)have no effect on the contribution margin ratio.

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Multiple Choice

Q 37Q 37

To obtain the dollar sales volume necessary to attain a given target profit, which of the following formulas should be used?
A)(Fixed expenses + Target net profit)/Total contribution margin
B)(Fixed expenses + Target net profit)/Contribution margin ratio
C)Fixed expenses/Contribution margin per unit
D)Target net profit/Contribution margin ratio

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Multiple Choice

Q 38Q 38

If sales volume increases and all other factors remain constant, then the:
A)contribution margin ratio will increase.
B)break-even point will decrease.
C)margin of safety will increase.
D)net operating income will decrease.

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Multiple Choice

Q 39Q 39

If the degree of operating leverage is 4, then a one percent change in quantity sold should result in a four percent change in:
A)unit contribution margin.
B)revenue.
C)variable expense.
D)net operating income.

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Multiple Choice

Q 40Q 40

Which of the following is an assumption underlying standard CVP analysis?
A)In multiproduct companies, the sales mix is constant.
B)In manufacturing companies, inventories always change.
C)The price of a product or service is expected to change as volume changes.
D)Fixed expenses will change as volume increases.

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Multiple Choice

Q 41Q 41

Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. If the company sells 5,300 units, its net operating income should be closest to:
A)$24,600
B)$2,200
C)$22,874
D)$15,400

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Multiple Choice

Q 42Q 42

Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January. If the company sells 4,600 units, its total contribution margin should be closest to:
A)$54,600
B)$59,800
C)$69,400
D)$13,362

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Multiple Choice

Q 43Q 43

Schister Systems uses the following data in its Cost-Volume-Profit analyses: What is total contribution margin if sales volume increases by 20%?
A)$80,000
B)$158,400
C)$200,000
D)$144,000

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Multiple Choice

Q 44Q 44

Kelchner Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The contribution margin ratio is closest to:
A)67%
B)40%
C)33%
D)60%

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Multiple Choice

Q 45Q 45

Nocum Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. If sales decline to 2,900 units, the net operating income would be closest to:
A)$29,000
B)$1,000
C)$8,700
D)$8,000

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Multiple Choice

Q 46Q 46

Stauffer Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The variable expense ratio is closest to:
A)60%
B)40%
C)67%
D)33%

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Multiple Choice

Q 47Q 47

Carver Corporation produces a product which sells for $40.Variable manufacturing costs are $18 per unit.Fixed manufacturing costs are $5 per unit based on the current level of activity, and fixed selling and administrative costs are $4 per unit.A selling commission of 15% of the selling price is paid on each unit sold.The contribution margin per unit is:
A)$7
B)$17
C)$22
D)$16

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Multiple Choice

Q 48Q 48

Coultrap Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The contribution margin per unit is closest to:
A)$21.00
B)$60.00
C)$39.00
D)$4.90

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Multiple Choice

Q 49Q 49

Escareno Corporation has provided its contribution format income statement for June.The company produces and sells a single product. If the company sells 8,200 units, its total contribution margin should be closest to:
A)$301,000
B)$311,600
C)$319,200
D)$66,674

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Multiple Choice

Q 50Q 50

Decaprio Inc.produces and sells a single product.The company has provided its contribution format income statement for June. If the company sells 9,200 units, its net operating income should be closest to:
A)$27,077
B)$49,900
C)$36,700
D)$25,900

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Multiple Choice

Q 51Q 51

Warrix Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. If sales increase to 3,020 units, the increase in net operating income would be closest to:
A)$800.00
B)$20.00
C)$600.00
D)$200.00

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Multiple Choice

Q 52Q 52

Thomason Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. If the variable cost per unit increases by $1, spending on advertising increases by $2,000, and unit sales increase by 50 units, the net operating income would be closest to:
A)$450
B)$1,000
C)$2,150
D)$9,450

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Multiple Choice

Q 53Q 53

Duve Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. If the selling price increases by $4 per unit and the sales volume decreases by 200 units, the net operating income would be closest to:
A)$7,200
B)$12,800
C)$10,400
D)$11,520

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Multiple Choice

Q 54Q 54

Ploeger Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The break-even point in dollar sales is closest to:
A)$234,000
B)$237,900
C)$156,000
D)$0

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Multiple Choice

Q 55Q 55

The following information pertains to Nova Co.'s cost-volume-profit relationships: How much will be contributed to net operating income by the 1,001st unit sold?
A)$650
B)$500
C)$150
D)$0

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Multiple Choice

Q 56Q 56

Mishoe Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The break-even point in unit sales is closest to:
A)0 units
B)895 units
C)700 units
D)650 units

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Multiple Choice

Q 57Q 57

Stockmaster Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The margin of safety in dollars is closest to:
A)$6,400
B)$16,000
C)$121,600
D)$128,000

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Multiple Choice

Q 58Q 58

Hedman Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The margin of safety percentage is closest to:
A)75%
B)1%
C)6%
D)24%

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Multiple Choice

Q 59Q 59

Cassius Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The number of units that must be sold to achieve a target profit of $31,500 is closest to:
A)42,000 units
B)16,400 units
C)35,000 units
D)9,400 units

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Multiple Choice

Q 60Q 60

Goodman Corporation has sales of 3,000 units at $80 per unit.Variable costs are 35% of the sales price.If total fixed costs are $66,000, the degree of operating leverage is:
A)0.79
B)0.93
C)2.67
D)1.73

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Multiple Choice

Q 61Q 61

Jilk Inc.'s contribution margin ratio is 58% and its fixed monthly expenses are $36,000.Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $103,000?
A)$23,740
B)$59,740
C)$67,000
D)$7,260

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Multiple Choice

Q 62Q 62

Gayne Corporation's contribution margin ratio is 12% and its fixed monthly expenses are $84,000.If the company's sales for a month are $738,000, what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change.
A)$565,440
B)$654,000
C)$88,560
D)$4,560

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Multiple Choice

Q 63Q 63

Creswell Corporation's fixed monthly expenses are $29,000 and its contribution margin ratio is 56%.Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $95,000?
A)$12,800
B)$24,200
C)$53,200
D)$66,000

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Multiple Choice

Q 64Q 64

Northern Pacific Fixtures Corporation sells a single product for $28 per unit.If variable expenses are 65% of sales and fixed expenses total $9,800, the break-even point is:
A)$15,077
B)$18,200
C)$9,800
D)$28,000

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Multiple Choice

Q 65Q 65

Variable expenses for Alpha Corporation are 40% of sales.What are sales at the break-even point, assuming that fixed expenses total $150,000 per year:
A)$250,000
B)$375,000
C)$600,000
D)$150,000

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Multiple Choice

Q 66Q 66

Moyas Corporation sells a single product for $20 per unit.Last year, the company's sales revenue was $300,000 and its net operating income was $24,000.If fixed expenses totaled $96,000 for the year, the break-even point in unit sales was:
A)12,000 units
B)9,900 units
C)15,000 units
D)14,100 units

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Multiple Choice

Q 67Q 67

Sabv Corporation's break-even-point in sales is $675,000, and its variable expenses are 75% of sales.If the company lost $24,000 last year, sales must have amounted to:
A)$651,000
B)$579,000
C)$603,000
D)$471,000

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Multiple Choice

Q 68Q 68

Last year Easton Corporation reported sales of $480,000, a contribution margin ratio of 25% and a net loss of $16,000.Based on this information, the break-even point was:
A)$435,000
B)$544,000
C)$506,000
D)$600,000

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Multiple Choice

Q 69Q 69

Black Corporation's sales are $600,000, its fixed expenses are $150,000, and its variable expenses are 60% of sales.The margin of safety is:
A)$90,000
B)$190,000
C)$225,000
D)$240,000

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Multiple Choice

Q 70Q 70

Awtis Corporation has a margin of safety percentage of 20% based on its actual sales.The break-even point is $500,000 and the variable expenses are 60% of sales.Given this information, the actual profit is:
A)$65,000
B)$55,000
C)$50,000
D)$41,500

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Multiple Choice

Q 71Q 71

Tropp Corporation sells a product for $10 per unit.The fixed expenses are $420,000 per month and the unit variable expenses are 60% of the selling price.What sales would be necessary in order for Tropp to realize a profit of 10% of sales?
A)$1,050,000
B)$945,000
C)$1,400,000
D)$840,000

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Multiple Choice

Q 72Q 72

Hopi Corporation expects the following operating results for next year: What is Hopi expecting total fixed expenses to be next year?
A)$75,000
B)$100,000
C)$200,000
D)$225,000

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Multiple Choice

Q 73Q 73

Iverson Corporation's variable expenses are 60% of sales.At a $400,000 sales level, the degree of operating leverage is 5.If sales increase by $40,000, the new degree of operating leverage will be (rounded):
A)3.67
B)2.86
C)5.25
D)5.00

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Multiple Choice

Q 74Q 74

Data concerning Dorazio Corporation's single product appear below: Fixed expenses are $87,000 per month.The company is currently selling 1,000 units per month.Management is considering using a new component that would increase the unit variable cost by $28.Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units.What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $5,600
B)increase of $33,600
C)decrease of $5,600
D)decrease of $33,600

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Multiple Choice

Q 75Q 75

Kuzio Corporation produces and sells a single product.Data concerning that product appear below: The company is currently selling 6,000 units per month.Fixed expenses are $263,000 per month.The marketing manager believes that a $5,000 increase in the monthly advertising budget would result in a 140 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $2,280
B)increase of $7,280
C)decrease of $5,000
D)decrease of $2,280

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Multiple Choice

Q 76Q 76

Data concerning Pellegren Corporation's single product appear below: Fixed expenses are $531,000 per month.The company is currently selling 4,000 units per month.The marketing manager would like to cut the selling price by $14 and increase the advertising budget by $35,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 500 units.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $18,000
B)increase of $38,000
C)decrease of $38,000
D)increase of $58,000

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Multiple Choice

Q 77Q 77

Warbler Gift's reported the following information for the sales of their single product: Warbler's salesmen have proposed to decrease the selling price by 50 cents per unit.How many units will need to be sold for Warbler to earn at least the same net operating income?
A)5,715 units
B)36,000 units
C)34,286 units
D)28,572 units

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Multiple Choice

Q 78Q 78

Data concerning Bazin Corporation's single product appear below: Fixed expenses are $384,000 per month.The company is currently selling 6,000 units per month.The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $9 per unit.In exchange, the sales staff would accept a decrease in their salaries of $46,000 per month.(This is the company's savings for the entire sales staff.)The marketing manager predicts that introducing this sales incentive would increase monthly sales by 500 units.What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $27,500
B)decrease of $64,500
C)increase of $41,500
D)increase of $507,500

Free

Multiple Choice

Q 79Q 79

Chovanec Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $521,000 per month.The company is currently selling 7,000 units per month.Management is considering using a new component that would increase the unit variable cost by $6.Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $48,000
B)decrease of $6,000
C)increase of $48,000
D)increase of $6,000

Free

Multiple Choice

Q 80Q 80

How much will a company's net operating income change if it undertakes an advertising campaign given the following data:
A)$200 increase
B)$25,200 increase
C)$15,000 increase
D)$9,800 increase

Free

Multiple Choice

Q 81Q 81

Data concerning Kardas Corporation's single product appear below: The company is currently selling 8,000 units per month.Fixed expenses are $719,000 per month.The marketing manager believes that a $20,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $160
B)increase of $20,160
C)decrease of $20,000
D)increase of $160

Free

Multiple Choice

Q 82Q 82

Cobble Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $499,000 per month.The company is currently selling 5,000 units per month.The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $33,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 900 units.What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $56,100
B)decrease of $8,900
C)increase of $99,300
D)decrease of $56,100

Free

Multiple Choice

Q 83Q 83

Sannella Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $991,000 per month.The company is currently selling 8,000 units per month.The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $11 per unit.In exchange, the sales staff would accept a decrease in their salaries of $74,000 per month.(This is the company's savings for the entire sales staff.)The marketing manager predicts that introducing this sales incentive would increase monthly sales by 200 units.What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $1,246,600
B)increase of $14,600
C)decrease of $133,400
D)increase of $71,800

Free

Multiple Choice

Q 84Q 84

Wenstrom Corporation produces and sells a single product.Data concerning that product appear below: The break-even in monthly dollar sales is closest to:
A)$342,550
B)$204,455
C)$109,616
D)$161,200

Free

Multiple Choice

Q 85Q 85

Borich Corporation produces and sells a single product.Data concerning that product appear below: The break-even in monthly unit sales is closest to:
A)2,055
B)4,030
C)4,194
D)3,426

Free

Multiple Choice

Q 86Q 86

Data concerning Follick Corporation's single product appear below: The break-even in monthly dollar sales is closest to:
A)$1,148,400
B)$638,851
C)$321,552
D)$446,600

Free

Multiple Choice

Q 87Q 87

Wimpy Inc.produces and sells a single product.The selling price of the product is $150.00 per unit and its variable cost is $58.50 per unit.The fixed expense is $366,915 per month. The break-even in monthly dollar sales is closest to:
A)$601,500
B)$366,915
C)$636,408
D)$940,808

Free

Multiple Choice

Q 88Q 88

Given the following data: The break-even point in dollars is:
A)$6,000
B)$4,500
C)$2,647
D)$4,000

Free

Multiple Choice

Q 89Q 89

Hevesy Inc.produces and sells a single product.The selling price of the product is $200.00 per unit and its variable cost is $80.00 per unit.The fixed expense is $300,000 per month.The break-even in monthly unit sales is closest to:
A)2,500
B)1,500
C)3,750
D)2,583

Free

Multiple Choice

Q 90Q 90

Singapore Candy Cane Corporation is a single product firm with the following cost structure for next year: What is the company's break-even point next year in sales dollars?
A)$ 90,000
B)$108,000
C)$135,000
D)$162,000

Free

Multiple Choice

Q 91Q 91

Bear Publishing sells a nature guide.The following information was reported for a typical month: What is Bear's current break-even point in unit and dollars?
A)1,100 units and $17,600
B)1,100 units and $8,000
C)8,000 units and $500
D)500 units and $8,000

Free

Multiple Choice

Q 92Q 92

Mason Corporation's selling price was $20 per unit.Fixed expenses totaled $54,000, variable expenses were $14 per unit, and the company reported a profit of $9,000 for the year.The break-even point for Mason Corporation is:
A)10,500 units
B)4,500 units
C)8,500 units
D)9,000 units

Free

Multiple Choice

Q 93Q 93

Derst Inc.sells a particular textbook for $140.Variable expenses are $25 per book.At the current volume of 6,000 books sold per year the company is just breaking even.Given these data, the annual fixed expenses associated with the textbook total:
A)$400,000
B)$690,000
C)$840,000
D)$150,000

Free

Multiple Choice

Q 94Q 94

Data concerning Buchenau Corporation's single product appear below: The break-even in monthly unit sales is closest to:
A)3,111
B)6,892
C)4,040
D)13,525

Free

Multiple Choice

Q 95Q 95

Sufra Corporation is planning to sell 100,000 units for $8.00 per unit and will break even at this level of sales.Fixed expenses will be $300,000.What are the company's variable expenses per unit?
A)$5.00
B)$4.00
C)$3.00
D)$4.50

Free

Multiple Choice

Q 96Q 96

Mio Canoe Livery rents canoes and transports canoes and customers to and from their canoe trip on a local river.The trip is priced at $20 per person and has a CM ratio of 30%.Mio's fixed expenses are $84,000.Last year, sales were $400,000 and profit was $36,000.How many units need to be sold to break-even, and how many need to be sold to earn a profit of $42,000?
A)1,800 and 2,100
B)6,000 and 8,143
C)14,000 and 21,000
D)4,200 and 6,300

Free

Multiple Choice

Q 97Q 97

A company makes a single product that it sells for $16 per unit.Fixed costs are $76,800 per month and the product has a contribution margin ratio of 40%.If the company's actual sales are $224,000, its margin of safety is:
A)$32,000
B)$96,000
C)$128,000
D)$192,000

Free

Multiple Choice

Q 98Q 98

The following data are available for the Phelps Corporation for a recent month: The break-even sales for the month for the company is closest to:
A)$91,667
B)$203,000
C)$148,000
D)$137,500

Free

Multiple Choice

Q 99Q 99

Ferkil Corporation manufacturers a single product that has a selling price of $100 per unit.Fixed expenses total $225,000 per year, and the company must sell 5,000 units to break even.If the company has a target profit of $67,500, sales in units must be:
A)6,000 units
B)5,750 units
C)7,925 units
D)6,500 units

Free

Multiple Choice

Q 100Q 100

Corporation X sold 25,000 units of product last year.The contribution margin per unit was $2, and fixed expenses totaled $40,000 for the year.This year fixed expenses are expected to increase to $45,000, but the contribution margin per unit will remain unchanged at $2.How many units must be sold this year to earn the same net operating income as was earned last year:
A)22,500
B)27,500
C)35,000
D)2,500

Free

Multiple Choice

Q 101Q 101

Data concerning Bedwell Enterprises Corporation's single product appear below: The unit sales to attain the company's monthly target profit of $17,000 is closest to:
A)6,159
B)4,280
C)2,525
D)4,321

Free

Multiple Choice

Q 102Q 102

The contribution margin ratio of Mountain Corporation's only product is 52%.The company's monthly fixed expense is $296,400 and the company's monthly target profit is $7,000.The dollar sales to attain that target profit is closest to:
A)$570,000
B)$157,768
C)$583,462
D)$154,128

Free

Multiple Choice

Q 103Q 103

Hettrick International Corporation's only product sells for $120.00 per unit and its variable expense is $52.80.The company's monthly fixed expense is $396,480 per month.The unit sales to attain the company's monthly target profit of $13,000 is closest to:
A)7,755
B)6,093
C)5,753
D)3,412

Free

Multiple Choice

Q 104Q 104

Caneer Corporation produces and sells a single product.Data concerning that product appear below: The unit sales to attain the company's monthly target profit of $44,000 is closest to:
A)7,896
B)12,769
C)6,578
D)4,341

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Multiple Choice

Q 105Q 105

Product Y sells for $15 per unit, and has variable expenses of $9 per unit.Fixed expenses total $300,000 per year.How many units of Product Y must be sold each year to yield an annual profit of $90,000?
A)50,000 units
B)65,000 units
C)15,000 units
D)43,333 units

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Multiple Choice

Q 106Q 106

Logsdon Corporation produces and sells a single product whose contribution margin ratio is 63%.The company's monthly fixed expense is $720,720 and the company's monthly target profit is $28,000.The dollar sales to attain that target profit is closest to:
A)$471,694
B)$454,054
C)$1,188,444
D)$1,144,000

Free

Multiple Choice

Q 107Q 107

Mcmurtry Corporation sells a product for $170 per unit.The product's current sales are 10,000 units and its break-even sales are 8,100 units.The margin of safety as a percentage of sales is closest to:
A)23%
B)81%
C)19%
D)77%

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Multiple Choice

Q 108Q 108

Cubie Corporation has provided the following data concerning its only product: What is the margin of safety in dollars?
A)$1,060,000
B)$106,000
C)$954,000
D)$706,667

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Multiple Choice

Q 109Q 109

Ensley Corporation has provided the following data concerning its only product: The margin of safety as a percentage of sales is closest to:
A)61%
B)28%
C)72%
D)39%

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Multiple Choice

Q 110Q 110

Evan's Electronics Boutique sells a digital camera.The following information was reported for the digital camera last month: Evan's margin of safety in dollars and percentage are closest to:
A)$8,000 and 83%
B)$9,600 and 120%
C)$8,000 and 45%
D)$9,600 and 55%

Free

Multiple Choice

Q 111Q 111

Majid Corporation sells a product for $240 per unit.The product's current sales are 41,300 units and its break-even sales are 36,757 units. What is the margin of safety in dollars?
A)$8,821,680
B)$6,608,000
C)$9,912,000
D)$1,090,320

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Multiple Choice

Q 112Q 112

Rushenberg Corporation's operating leverage is 10.8.If the company's sales increase by 14%, its net operating income should increase by about:
A)151.2%
B)14.0%
C)77.1%
D)10.8%

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Multiple Choice

Q 113Q 113

The February contribution format income statement of Mcabier Corporation appears below: The degree of operating leverage is closest to:
A)0.27
B)6.79
C)3.70
D)0.15

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Multiple Choice

Q 114Q 114

Sales at East Corporation declined from $100,000 to $80,000, while net operating income declined by 300%.Given these data, the company must have had an operating leverage of:
A)15
B)2.7
C)30
D)12

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Multiple Choice

Q 115Q 115

Gamma Corporation has sales of $120,000, a contribution margin of $48,000, and a net operating income of $12,000.The company's degree of operating leverage is:
A)2.5
B)4.0
C)10.0
D)4.8

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Multiple Choice

Q 116Q 116

Bendel Inc.has an operating leverage of 7.3.If the company's sales increase by 3%, its net operating income should increase by about:
A)243.3%
B)7.3%
C)21.9%
D)3.0%

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Multiple Choice

Q 117Q 117

Alpha Corporation reported the following data for its most recent year: sales, $1,000,000; variable expenses, $600,000; and fixed expenses, $300,000.The company's degree of operating leverage is closest to:
A)0.25
B)2.0
C)4.0
D)3.3

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Multiple Choice

Q 118Q 118

Lofft Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 10% increase in sales is closest to:
A)1.13%
B)88.89%
C)22.22%
D)4.50%

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Multiple Choice

Q 119Q 119

Serfass Corporation's contribution format income statement for July appears below: The degree of operating leverage is closest to:
A)0.05
B)0.15
C)21.31
D)6.89

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Multiple Choice

Q 120Q 120

Bristo Corporation has sales of 2,000 units at $35 per unit.Variable expenses are 40% of the selling price.If total fixed expenses are $22,000, the degree of operating leverage is:
A)0.79
B)1.40
C)2.10
D)3.50

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Multiple Choice

Q 121Q 121

Lydic Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The degree of operating leverage is closest to:
A)5.00
B)0.20
C)16.67
D)0.06

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Multiple Choice

Q 122Q 122

A company sells two products--J and K.The sales mix is expected to be $3 of sales of Product K for every $1 of sales of Product J.Product J has a contribution margin ratio of 40% whereas Product K has a contribution margin ratio of 50%.Annual fixed expenses are expected to be $120,000.The overall break-even point for the company in dollar sales is expected to be closest to:
A)$196,000
B)$200,000
C)$252,632
D)$263,420

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Multiple Choice

Q 123Q 123

Roddam Corporation produces and sells two products.Data concerning those products for the most recent month appear below: The fixed expenses of the entire company were $41,970.If the sales mix were to shift toward Product K09E with total dollar sales remaining constant, the overall break-even point for the entire company:
A)would increase.
B)could increase or decrease.
C)would not change.
D)would decrease.

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Multiple Choice

Q 124Q 124

Steffen Corporation has three products with the following characteristics: The overall contribution margin ratio for the company as a whole is closest to:
A)35.3%
B)75.0%
C)25.0%
D)28.5%

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Multiple Choice

Q 125Q 125

Mcdale Inc.produces and sells two products.Data concerning those products for the most recent month appear below: The fixed expenses of the entire company were $18,460.The break-even point for the entire company is closest to:
A)$23,367
B)$10,540
C)$24,550
D)$18,460

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Multiple Choice

Q 126Q 126

Sunnripe Corporation manufactures and sells two types of beach towels, standard and deluxe.Sunnripe expects the following operating results next year: Sunnripe expects to have a total of $57,600 in fixed expenses next year.What is Sunnripe's overall break-even point next year in sales dollars?
A)$72,000
B)$144,000
C)$192,000
D)$240,000

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Multiple Choice

Q 127Q 127

Flesch Corporation produces and sells two products.In the most recent month, Product C90B had sales of $24,000 and variable expenses of $6,480.Product Y45E had sales of $29,000 and variable expenses of $11,010.The fixed expenses of the entire company were $32,280.If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:
A)would decrease.
B)would increase.
C)could increase or decrease.
D)would not change.

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Multiple Choice

Q 128Q 128

Newham Corporation produces and sells two products.In the most recent month, Product R10L had sales of $28,000 and variable expenses of $6,440.Product X96N had sales of $22,000 and variable expenses of $7,560.The fixed expenses of the entire company were $32,710.The break-even point for the entire company is closest to:
A)$32,710
B)$45,431
C)$46,710
D)$17,290

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Multiple Choice

Q 129Q 129

If the company sells 4,500 units, its total contribution margin should be closest to:
A)$85,500
B)$24,652
C)$87,400
D)$81,600

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Multiple Choice

Q 130Q 130

If the company sells 4,200 units, its net operating income should be closest to:
A)$17,600
B)$23,009
C)$25,200
D)$2,000

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Multiple Choice

Q 131Q 131

If the company sells 9,100 units, its total contribution margin should be closest to:
A)$174,500
B)$192,000
C)$52,135
D)$182,000

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Multiple Choice

Q 132Q 132

If the company sells 9,700 units, its net operating income should be closest to:
A)$57,000
B)$55,000
C)$55,573
D)$58,500

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Multiple Choice

Q 133Q 133

If sales increase to 3,040 units, the increase in net operating income would be closest to:
A)$420.00
B)$140.00
C)$1,200.00
D)$780.00

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Multiple Choice

Q 134Q 134

If sales decline to 2,900 units, the net operating income would be closest to:
A)$1,050
B)$30,450
C)$10,150
D)$9,450

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Multiple Choice

Q 135Q 135

If the company sells 3,600 units, its total contribution margin should be closest to:
A)$39,200
B)$5,670
C)$43,200
D)$48,000

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Multiple Choice

Q 136Q 136

If the company sells 3,500 units, its net operating income should be closest to:
A)$5,513
B)$6,300
C)$300
D)-$4,700

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Multiple Choice

Q 140Q 140

What is the company's unit contribution margin?
A)$0.45 per unit
B)$2.10 per unit
C)$2.00 per unit
D)$4.10 per unit

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Multiple Choice

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Multiple Choice

Q 142Q 142

If the company increases its unit sales volume by 4% without increasing its fixed expenses, then total net operating income should be closest to:
A)$12,240
B)$318,240
C)$360,400
D)$311,973

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Multiple Choice

Q 143Q 143

What is the company's unit contribution margin?
A)$0.86 per unit
B)$2.35 per unit
C)$4.10 per unit
D)$1.75 per unit

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Multiple Choice

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Multiple Choice

Q 145Q 145

If the company increases its unit sales volume by 3% without increasing its fixed expenses, then total net operating income should be closest to:
A)$459,380
B)$453,667
C)$13,380
D)$482,660

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Multiple Choice

Q 146Q 146

If the selling price increases by $3 per unit and the sales volume decreases by 600 units, the net operating income would be closest to:
A)$24,800
B)$35,000
C)$19,200
D)$32,000

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Multiple Choice

Q 147Q 147

If the variable cost per unit increases by $10, spending on advertising increases by $1,500, and unit sales increase by 15,800 units, the net operating income would be closest to:
A)$12,500
B)$114,100
C)$91,200
D)$5,700

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Multiple Choice

Q 148Q 148

If sales increase to 6,020 units, the increase in net operating income would be closest to:
A)$1,000.00
B)$800.00
C)$200.00
D)$3.33

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Multiple Choice

Q 149Q 149

If the selling price increases by $3 per unit and the sales volume decreases by 400 units, the net operating income would be closest to:
A)$19,000
B)$16,800
C)$13,800
D)$17,733

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Multiple Choice

Q 150Q 150

The break-even point in unit sales is closest to:
A)5,850 units
B)4,500 units
C)0 units
D)5,400 units

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Multiple Choice

Q 151Q 151

The number of units that must be sold to achieve a target profit of $24,000 is closest to:
A)30,000 units
B)7,800 units
C)13,800 units
D)24,000 units

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Multiple Choice

Q 152Q 152

The break-even point in unit sales is closest to:
A)0 units
B)5,850 units
C)8,100 units
D)8,685 units

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Multiple Choice

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Multiple Choice

Q 154Q 154

The number of units that must be sold to achieve a target profit of $16,100 is closest to:
A)32,000 units
B)19,400 units
C)10,400 units
D)23,000 units

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Multiple Choice

Q 160Q 160

Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 20% increase in sales is closest to:
A)75.00%
B)1.60%
C)250.00%
D)5.33%

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Multiple Choice

Q 161Q 161

The company's margin of safety in units is closest to:
A)115,128 units
B)16,111 units
C)168,986 units
D)100,444 units

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Multiple Choice

Q 162Q 162

The company's unit contribution margin is closest to:
A)$4.50 per unit
B)$6.90 per unit
C)$3.60 per unit
D)$4.20 per unit

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Multiple Choice

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Multiple Choice

Q 164Q 164

The company's margin of safety in units is closest to:
A)234,222 units
B)564,242 units
C)45,455 units
D)457,500 units

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Multiple Choice

Q 165Q 165

The company's unit contribution margin is closest to:
A)$2.25 per unit
B)$5.55 per unit
C)$1.65 per unit
D)$6.60 per unit

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Multiple Choice

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Multiple Choice

Q 167Q 167

The company's break-even in unit sales is closest to:
A)118,806
B)206,957
C)346,087
D)14,775

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Multiple Choice

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Multiple Choice

Q 170Q 170

The company's break-even in unit sales is closest to:
A)272,308
B)98,333
C)92,055
D)60,488

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Multiple Choice

Q 173Q 173

This question is to be considered independently of all other questions relating to Houpe Corporation.Refer to the original data when answering this question. The marketing manager believes that a $14,000 increase in the monthly advertising budget would result in a 150 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $700
B)increase of $14,700
C)decrease of $14,000
D)decrease of $700

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Multiple Choice

Q 174Q 174

This question is to be considered independently of all other questions relating to Houpe Corporation.Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $5.Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 300 units.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $2,100
B)decrease of $27,900
C)increase of $2,100
D)increase of $27,900

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Multiple Choice

Q 175Q 175

This question is to be considered independently of all other questions relating to Houpe Corporation.Refer to the original data when answering this question. The marketing manager would like to cut the selling price by $7 and increase the advertising budget by $28,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 500 units.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $17,500
B)increase of $17,500
C)decrease of $24,500
D)increase of $38,500

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Multiple Choice

Q 176Q 176

This question is to be considered independently of all other questions relating to Houpe Corporation.Refer to the original data when answering this question. The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $11 per unit.In exchange, the sales staff would accept a decrease in their salaries of $58,000 per month.(This is the company's savings for the entire sales staff.)The marketing manager predicts that introducing this sales incentive would increase monthly sales by 100 units.What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $700
B)increase of $56,900
C)decrease of $115,300
D)increase of $588,700

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Multiple Choice

Q 177Q 177

This question is to be considered independently of all other questions relating to Lemelin Corporation.Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $3.Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 200 units.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $22,400
B)decrease of $1,400
C)increase of $22,400
D)increase of $1,400

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Multiple Choice

Q 178Q 178

This question is to be considered independently of all other questions relating to Lemelin Corporation.Refer to the original data when answering this question. The marketing manager believes that an $11,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $11,000
B)increase of $11,500
C)decrease of $500
D)increase of $500

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Multiple Choice

Q 179Q 179

This question is to be considered independently of all other questions relating to Lemelin Corporation.Refer to the original data when answering this question. The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $20 per unit.In exchange, the sales staff would accept a decrease in their salaries of $113,000 per month.(This is the company's savings for the entire sales staff.)The marketing manager predicts that introducing this sales incentive would increase monthly sales by 300 units.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $224,500
B)increase of $107,000
C)increase of $1,500
D)increase of $806,500

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Multiple Choice

Q 180Q 180

This question is to be considered independently of all other questions relating to Lemelin Corporation.Refer to the original data when answering this question. The marketing manager would like to cut the selling price by $18 and increase the advertising budget by $37,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 1,600 units.What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $118,200
B)increase of $302,200
C)decrease of $118,200
D)decrease of $7,800

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Multiple Choice

Q 181Q 181

This question is to be considered independently of all other questions relating to Thornbrough Corporation.Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $11.Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units.What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $82,500
B)decrease of $5,500
C)decrease of $82,500
D)increase of $5,500

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Multiple Choice

Q 182Q 182

This question is to be considered independently of all other questions relating to Thornbrough Corporation.Refer to the original data when answering this question. The marketing manager believes that a $28,000 increase in the monthly advertising budget would result in a 190 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $28,000
B)increase of $33,440
C)increase of $5,440
D)decrease of $5,440

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Multiple Choice

Q 183Q 183

This question is to be considered independently of all other questions relating to Thornbrough Corporation.Refer to the original data when answering this question. The marketing manager would like to cut the selling price by $18 and increase the advertising budget by $53,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 1,000 units.What should be the overall effect on the company's monthly net operating income of this change?
A)decrease of $105,000
B)increase of $149,000
C)increase of $105,000
D)decrease of $21,000

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Multiple Choice

Q 184Q 184

This question is to be considered independently of all other questions relating to Thornbrough Corporation.Refer to the original data when answering this question. The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $11 per unit.In exchange, the sales staff would accept a decrease in their salaries of $65,000 per month.(This is the company's savings for the entire sales staff.)The marketing manager predicts that introducing this sales incentive would increase monthly sales by 300 units.What should be the overall effect on the company's monthly net operating income of this change?
A)increase of $1,269,500
B)increase of $37,500
C)increase of $61,700
D)decrease of $92,500

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Multiple Choice

Q 185Q 185

The break-even in monthly unit sales is closest to:
A)2,328 units
B)1,342 units
C)3,441 units
D)2,200 units

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Multiple Choice

Q 186Q 186

The break-even in monthly dollar sales is closest to:
A)$791,436
B)$535,365
C)$506,000
D)$308,660

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Multiple Choice

Q 187Q 187

The break-even in monthly unit sales is closest to:
A)2,038 units
B)7,027 units
C)2,870 units
D)3,978 units

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Q 188Q 188

The break-even in monthly dollar sales is closest to:
A)$407,600
B)$1,405,400
C)$574,000
D)$795,600

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Q 189Q 189

The break-even in monthly unit sales is closest to:
A)3,873 units
B)1,740 units
C)1,201 units
D)2,271 units

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Q 190Q 190

The break-even in monthly dollar sales is closest to:
A)$191,400
B)$249,810
C)$426,030
D)$132,110

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Multiple Choice

Q 191Q 191

What is the company's break-even point in sales dollars?
A)$450,000
B)$180,000
C)$300,000
D)$500,000

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Q 192Q 192

How many units would the company have to sell in order to have a net operating income of $40,000?
A)20,000 units
B)9,000 units
C)11,000 units
D)7,333 units

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Multiple Choice

Q 193Q 193

At the budgeted sales level of 10,000 units, what is the company's degree of operating leverage?
A)10.0
B)6.0
C)22.5
D)5.0

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Multiple Choice

Q 194Q 194

Assume the company's target profit is $14,000.The unit sales to attain that target profit is closest to:
A)7,746 units
B)2,556 units
C)4,706 units
D)3,815 units

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Q 195Q 195

Assume the company's target profit is $16,000.The dollar sales to attain that target profit is closest to:
A)$564,328
B)$1,710,085
C)$1,038,898
D)$842,281

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Multiple Choice

Q 196Q 196

Assume the company's target profit is $11,000.The unit sales to attain that target profit is closest to:
A)2,629 units
B)3,983 units
C)4,781 units
D)7,732 units

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Multiple Choice

Q 197Q 197

Assume the company's target profit is $12,000.The dollar sales to attain that target profit is closest to:
A)$1,549,412
B)$798,182
C)$526,800
D)$958,131

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Multiple Choice

Q 198Q 198

Assume the company's target profit is $17,000.The unit sales to attain that target profit is closest to:
A)5,804 units
B)2,921 units
C)4,057 units
D)10,433 units

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Q 199Q 199

Assume the company's target profit is $8,000.The dollar sales to attain that target profit is closest to:
A)$596,111
B)$1,532,857
C)$852,723
D)$429,200

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Multiple Choice

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Q 201Q 201

How many units would the company have to sell in order to have a net operating income equal to 5% of total sales dollars?
A)18,000 units
B)20,000 units
C)15,333 units
D)14,286 units

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Multiple Choice

Q 202Q 202

What is the margin of safety in dollars?
A)$5,520,000
B)$1,545,600
C)$3,974,400
D)$3,680,000

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Multiple Choice

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Q 204Q 204

What is the margin of safety in dollars?
A)$4,505,760
B)$858,240
C)$3,576,000
D)$5,364,000

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Q 207Q 207

If the company's sales increase by 7%, its net operating income should increase by about:
A)26%
B)7%
C)66%
D)11%

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Q 209Q 209

Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 5% increase in sales is closest to:
A)0.29%
B)87.50%
C)0.11%
D)218.75%

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Q 211Q 211

If the company's sales increase by 19%, its net operating income should increase by about:
A)10%
B)19%
C)83%
D)186%

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Multiple Choice

Q 212Q 212

The break-even point for the entire company is closest to:
A)$42,550
B)$71,020
C)$69,754
D)$30,450

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Multiple Choice

Q 213Q 213

If the sales mix were to shift toward Product B32L with total sales remaining constant, the overall break-even point for the entire company:
A)could increase or decrease.
B)would decrease.
C)would not change.
D)would increase.

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Multiple Choice

Q 214Q 214

The break-even point for the entire company is closest to:
A)$41,160
B)$17,840
C)$53,455
D)$54,730

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Multiple Choice

Q 215Q 215

If the sales mix were to shift toward Product R38T with total sales remaining constant, the overall break-even point for the entire company:
A)would not change.
B)would increase.
C)would decrease.
D)could increase or decrease.

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Multiple Choice

Q 216Q 216

In July, Meers Corporation sold 3,700 units of its only product.Its total sales were $107,300, its total variable expenses were $66,600, and its total fixed expenses were $34,800.
Required:
a.Construct the company's contribution format income statement for July.
b.Redo the company's contribution format income statement assuming that the company sells 3,400 units.

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Essay

Q 217Q 217

Mcconkey Corporation produces and sells a single product.The company's contribution format income statement for July appears below: Required:
Redo the company's contribution format income statement assuming that the company sells 5,800 units.

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Q 218Q 218

Giannini Inc., which produces and sells a single product, has provided the following contribution format income statement for March: Required:
Redo the company's contribution format income statement assuming that the company sells 5,500 units.

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Q 219Q 219

Mechem Corporation produces and sells a single product.In April, the company sold 2,100 units.Its total sales were $205,800, its total variable expenses were $107,100, and its total fixed expenses were $82,400.
Required:
a.Construct the company's contribution format income statement for April.
b.Redo the company's contribution format income statement assuming that the company sells 2,200 units.

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Essay

Q 220Q 220

Certosimo Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required:
a.If sales increase to 7,040 units, what would be the estimated increase in net operating income?
b.If sales decline to 6,900 units, what would be the estimated net operating income?

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Essay

Q 221Q 221

Muzzillo Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required:
a.If the selling price increases by $4 per unit and the sales volume decreases by 300 units, what would be the estimated net operating income?
b.If the variable cost per unit increases by $6, spending on advertising increases by $3,000, and unit sales increase by 1,800 units, what would be the estimated net operating income?

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Q 222Q 222

Montesdeoca Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required:
a.If sales decline to 1,900 units, what would be the estimated net operating income?
b.If the selling price increases by $4 per unit and the sales volume decreases by 200 units, what would be the estimated net operating income?
c.What is the break-even point in dollar sales?

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Q 223Q 223

Sattler Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required:
a.What is the contribution margin per unit?
b.What is the variable expense ratio?
c.If sales decline to 7,900 units, what would be the estimated net operating income?
d.If the variable cost per unit increases by $5, spending on advertising increases by $2,000, and unit sales increase by 3,400 units, what would be the estimated net operating income?
e.What is the break-even point in dollar sales?
f.Estimate how many units must be sold to achieve a target profit of $50,400.
g.What is the margin of safety percentage?
h.Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

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Q 224Q 224

Laraia Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required:
a.What is the contribution margin per unit?
b.What is the contribution margin ratio?
c.What is the variable expense ratio?
d.If sales increase to 3,050 units, what would be the estimated increase in net operating income?
e.If sales decline to 2,900 units, what would be the estimated net operating income?
f.If the selling price increases by $4 per unit and the sales volume decreases by 200 units, what would be the estimated net operating income?
g.If the variable cost per unit increases by $5, spending on advertising increases by $3,000, and unit sales increase by 450 units, what would be the estimated net operating income?
h.What is the break-even point in unit sales?
i.What is the break-even point in dollar sales?
j.Estimate how many units must be sold to achieve a target profit of $54,000.
k.What is the margin of safety in dollars?
l.What is the margin of safety percentage?
m.What is the degree of operating leverage?
n.Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

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Q 225Q 225

Zaccaria Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required:
a.What is the contribution margin ratio?
b.If sales increase to 5,040 units, what would be the estimated increase in net operating income?
c.If the selling price increases by $4 per unit and the sales volume decreases by 400 units, what would be the estimated net operating income?
d.What is the break-even point in unit sales?
e.What is the margin of safety in dollars?
f.What is the degree of operating leverage?

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Q 226Q 226

Stonebraker Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required:
a.If sales increase to 9,040 units, what would be the estimated increase in net operating income?
b.If the variable cost per unit increases by $6, spending on advertising increases by $3,000, and unit sales increase by 19,200 units, what would be the estimated net operating income?
j.Estimate how many units must be sold to achieve a target profit of $26,100.

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Q 227Q 227

Mancine Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required:
a.What is the break-even point in unit sales?
b.Estimate how many units must be sold to achieve a target profit of $50,000.

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Q 228Q 228

Sun Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required:
a.What is the margin of safety in dollars?
b.What is the degree of operating leverage?

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Q 229Q 229

Langin Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required:
a.What is the margin of safety percentage?
b.Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

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Q 230Q 230

The management of Merklin Corporation expects sales in May to be $105,000.The company's contribution margin ratio is 70% and its fixed monthly expenses are $48,000.
Required:
Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change.Show your work!

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Q 231Q 231

Sarratt Corporation's contribution margin ratio is 62% and its fixed monthly expenses are $91,000.Assume that the company's sales for May are expected to be $193,000.
Required:
Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change.Show your work!

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Q 232Q 232

Huitron Inc.expects its sales in September to be $143,000.The company's contribution margin ratio is 65% and its fixed monthly expenses are $62,000.
Required:
Estimate the company's net operating income for September, assuming that the fixed monthly expenses do not change.Show your work!

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Q 233Q 233

Hamiel Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $301,000 per month.The company is currently selling 5,000 units per month.
Required:
The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $16 per unit.In exchange, the sales staff would accept an overall decrease in their salaries of $68,000 per month.The marketing manager predicts that introducing this sales incentive would increase monthly sales by 200 units.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

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Q 234Q 234

Data concerning Wislocki Corporation's single product appear below: Fixed expenses are $466,000 per month.The company is currently selling 6,000 units per month.
Required:
The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $11 per unit.In exchange, the sales staff would accept an overall decrease in their salaries of $55,000 per month.The marketing manager predicts that introducing this sales incentive would increase monthly sales by 100 units.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

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Q 235Q 235

Naumann Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $234,000 per month.The company is currently selling 4,000 units per month.
Required:
Management is considering using a new component that would increase the unit variable cost by $7.Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 500 units.What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? Show your work!

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Q 236Q 236

Data concerning Neuner Corporation's single product appear below: Fixed expenses are $425,000 per month.The company is currently selling 4,000 units per month.
Required:
The marketing manager would like to cut the selling price by $11 and increase the advertising budget by $23,700 per month.The marketing manager predicts that these two changes would increase monthly sales by 400 units.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

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Q 237Q 237

Bethard Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $354,000 per month.The company is currently selling 5,000 units per month.
Required:
The marketing manager would like to cut the selling price by $8 and increase the advertising budget by $23,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 600 units.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

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Q 238Q 238

Data concerning Cavaluzzi Corporation's single product appear below: Fixed expenses are $440,000 per month.The company is currently selling 8,000 units per month.
Required:
The marketing manager believes that an $8,000 increase in the monthly advertising budget would result in a 150 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

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Q 239Q 239

Shelhorse Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $275,000 per month.The company is currently selling 4,000 units per month.
Required:
The marketing manager believes that a $13,000 increase in the monthly advertising budget would result in a 150 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

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Q 240Q 240

Data concerning Milian Corporation's single product appear below: Fixed expenses are $66,000 per month.The company is currently selling 1,000 units per month.
Required:
Management is considering using a new component that would increase the unit variable cost by $15.Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 200 units.What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? Show your work!

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Q 241Q 241

Cleghorn Corporation produces and sells a single product.Data concerning that product appear below: Required:
Determine the monthly break-even in total dollar sales.Show your work!

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Q 242Q 242

Hamernik, Inc., produces and sells a single product whose selling price is $240.00 per unit and whose variable expense is $72.00 per unit.The company's fixed expense is $372,960 per month.
Required:
Determine the monthly break-even in either unit or total dollar sales.Show your work!

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Q 243Q 243

Frisch Corporation produces and sells a single product.Data concerning that product appear below: Required:
Determine the monthly break-even in either unit or total dollar sales.Show your work!

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Q 244Q 244

Yamakawa Corporation produces and sells a single product.Data concerning that product appear below: Required:
Determine the monthly break-even in unit sales.Show your work!

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Q 245Q 245

Liz, Inc., produces and sells a single product.The product sells for $130.00 per unit and its variable expense is $48.10 per unit.The company's monthly fixed expense is $223,587.
Required:
Determine the monthly break-even in unit sales.Show your work!

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Q 246Q 246

Malensek International, Inc., produces and sells a single product.The product sells for $240.00 per unit and its variable expense is $55.20 per unit.The company's monthly fixed expense is $249,480.
Required:
Determine the monthly break-even in total dollar sales.Show your work!

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Q 247Q 247

Brihon Corporation produces and sells a single product.Data concerning that product appear below: Required:
a.Assume the company's monthly target profit is $12,650.Determine the unit sales to attain that target profit.Show your work!
b.Assume the company's monthly target profit is $63,250.Determine the dollar sales to attain that target profit.Show your work!

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Q 248Q 248

The contribution margin ratio of Kuck Corporation's only product is 75%.The company's monthly fixed expense is $585,000 and the company's monthly target profit is $11,250.
Required:
Determine the dollar sales to attain the company's target profit.Show your work!

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Q 249Q 249

Rachal Corporation produces and sells a single product whose selling price is $150.00 per unit and whose variable expense is $57.00 per unit.The company's monthly fixed expense is $381,300.
Required:
a.Assume the company's monthly target profit is $9,300.Determine the unit sales to attain that target profit.Show your work!
b.Assume the company's monthly target profit is $18,600.Determine the dollar sales to attain that target profit.Show your work!

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Q 250Q 250

Bussy Corporation produces and sells a single product whose contribution margin ratio is 54%.The company's monthly fixed expense is $561,600 and the company's monthly target profit is $34,560.
Required:
Determine the dollar sales to attain the company's target profit.Show your work!

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Q 251Q 251

Hawver Corporation produces and sells a single product.Data concerning that product appear below: Required:
Assume the company's monthly target profit is $19,800.Determine the unit sales to attain that target profit.Show your work!

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Q 252Q 252

The selling price of Old Corporation's only product is $180.00 per unit and its variable expense is $37.80 per unit.The company's monthly fixed expense is $483,480.
Required:
Assume the company's monthly target profit is $56,880.Determine the unit sales to attain that target profit.Show your work!

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Q 253Q 253

Dickus Corporation's only product sells for $100 per unit.Its current sales are 35,600 units and its break-even sales are 29,192 units.
Required:
Compute the margin of safety in both dollars and as a percentage of sales.

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Q 254Q 254

Haslem Inc.has provided the following data concerning its only product: Required:
Compute the margin of safety in both dollars and as a percentage of sales.

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Q 255Q 255

Knezevich Corporation makes a product that sells for $230 per unit.The product's current sales are 36,900 units and its break-even sales are 32,103 units.
Required:
Compute the margin of safety in both dollars and as a percentage of sales.

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Q 256Q 256

Lubke Corporation's contribution format income statement for the most recent month follows: Required:
a.Compute the degree of operating leverage to two decimal places.
b.Using the degree of operating leverage, estimate the percentage change in net operating income that should result from a 3% increase in sales.

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Q 257Q 257

Mcquage Corporation has provided its contribution format income statement for July. Required:
a.Compute the degree of operating leverage to two decimal places.
b.Using the degree of operating leverage, estimate the percentage change in net operating income that should result from a 19% increase in sales.

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Q 258Q 258

In the most recent month, Sardella Corporation's total contribution margin was $46,200 and its net operating income $13,200.
Required:
a.Compute the degree of operating leverage to two decimal places.
b.Using the degree of operating leverage, estimate the percentage change in net operating income that should result from a 10% increase in sales.

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Q 259Q 259

Brancati Inc.produces and sells two products.Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $32,860.
Required:
a.Determine the overall break-even point for the company in total sales dollars.Show your work!
b.If the sales mix shifts toward Product W07C with no change in total sales, what will happen to the break-even point for the company? Explain.

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Q 260Q 260

Veren Inc.produces and sells two products.During the most recent month, Product F73A's sales were $27,000 and its variable expenses were $9,450.Product L75P's sales were $14,000 and its variable expenses were $5,310.The company's fixed expenses were $21,060.
Required:
a.Determine the overall break-even point for the company in total sales dollars.Show your work!
b.If the sales mix shifts toward Product F73A with no change in total sales, what will happen to the break-even point for the company? Explain.

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