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Exam 2: Costvolumeprofit Relationships

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Question 91

Multiple Choice

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Highjinks, Inc., has provided the following budgeted data: What is the company's margin of safety as a percentage of sales?

A) 50%
B) 25%
C) 75%
D) 100%

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

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Question 92

Multiple Choice

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Bois Corporation has provided its contribution format income statement for January. The degree of operating leverage is closest to:

A) 0.11
B) 9.37
C) 0.27
D) 3.66

E) All of the above
F) C) and D)

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Question 93

Multiple Choice

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Keomuangtai Corporation produces and sells a single product. The company has provided its contribution format income statement for October. If the company sells 4,500 units, its total contribution margin should be closest to:

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:

Schister Systems uses the following data in its Cost-Volume-Profit analyses: What is total contribution margin if sales volume increases by 20%?

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.

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:

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:

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!

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?

Warrix Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. If sales increase to 3,020 units, the increase in net operating income would be closest to:

Data concerning Buchenau Corporation's single product appear below: The break-even in monthly unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)

Data concerning Follick Corporation's single product appear below: The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.)

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.

Thomason Corporation has provided the following contribution format income statement. Assume that the following information is 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:

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:

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!

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!

Maruska Corporation has provided the following data concerning its only product: What is the margin of safety in dollars?

Sjostrom Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. 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: