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Exam 6: Cost-Volume-Profit Relationships

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Question 91

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Garth Corporation sells a single product.If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change,then:

A) Option A
B) Option B
C) Option C
D) Option D

E) A) and D)
F) C) and D)

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Question 92

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Seiersen Corporation's contribution format income statement for February appears below: The degree of operating leverage is closest to:

A) 10.98
B) 0.22
C) 0.09
D) 4.48

E) A) and C)
F) A) and B)

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Question 93

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The selling price of Roscioli Corporation's only product is $210.00 per unit and its variable expense is $75.60 per unit.The company's monthly fixed expense is $537,600. Required: Assume the company's monthly target profit is $13,440.Determine the unit sales to attain that target profit.Show your work!

Data concerning Marchman Corporation's single product appear below: The company is currently selling 4,000 units per month.Fixed expenses are $166,000 per month.Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Marchman 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 $11,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 800 units.What should be the overall effect on the company's monthly net operating income of this change?

Hartung Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $147,000 per month.The company is currently selling 2,000 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 $13 per unit.In exchange,the sales staff would accept a decrease in their salaries of $22,000 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 400 units.What should be the overall effect on the company's monthly net operating income of this change?

On a cost-volume-profit graph,the revenue line will be shown below the total expense line for any activity level above the break-even point.

Maddaloni International,Inc. ,produces and sells a single product.The product sells for $160.00 per unit and its variable expense is $46.40 per unit.The company's monthly fixed expense is $219,248. Required: Determine the monthly break-even in total dollar sales.Show your work!

Garcia Veterinary Clinic expects the following operating results next year: What is Garcia's break-even point next year in sales dollars?

The management of Pacubas Corporation expects sales in July to be $121,000.The company's contribution margin ratio is 64% and its fixed monthly expenses are $40,000. Required: Estimate the company's net operating income for July,assuming that the fixed monthly expenses do not change.Show your work!

The contribution margin ratio of Baginski Corporation's only product is 53%.The company's monthly fixed expense is $617,980 and the company's monthly target profit is $23,000.The dollar sales to attain that target profit is closest to:

Wrobbel Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $307,000 per month.The company is currently selling 6,000 units per month. Required: Management is considering using a new component that would increase the unit variable cost by $2.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!

The Breiden Corporation sells rodaks for $6.00 per unit.Fixed expenses total $37,500 per month and variable expenses are $2.00 per unit.The number of units that must be sold each month to realize a profit of 15% of sales is closest to:

Fost Corporation's contribution margin ratio is 20%.If the degree of operating leverage is 15 at the $225,000 sales level,net operating income at the $225,000 sales level must equal:

Spartan Systems reported total sales of $300,000,at a price of $20 and per unit variable expenses of $12,for the sales of their single product. What is the amount of contribution margin if sales volume increases by 30%?

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

A cement manufacturer has supplied the following data: The company's contribution margin ratio is closest to:

A manufacturer of premium wire strippers has supplied the following data: The company's degree of operating leverage is closest to:

Reynold Enterprises sells a single product for $25.The variable expense per unit is $15 and the fixed expense per unit is $5 at the current level of sales.The company's net operating income will increase by $10 if one more unit is sold.

The following monthly data are available for the Wyatt Corporation and its only product: The margin of safety for the company during May was:

Moccio Enterprises,Inc. ,produces and sells a single product whose selling price is $120.00 per unit and whose variable expense is $37.20 per unit.The company's monthly fixed expense is $356,040. Assume the company's target profit is $15,000.The dollar sales to attain that target profit is closest to: