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Exam 5: Cost-Volume-Profit Relationships

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Question 111

True/False

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The R ² (i.e., R-squared) tells us the percentage of the variation in the dependent variable (cost) that is explained by variation in the independent variable (activity).

A) True
B) False

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Question 112

Multiple Choice

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

A) 28.9%
B) 63.9%
C) 71.1%
D) 36.1%

E) B) and C)
F) None of the above

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Question 113

Multiple Choice

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Nussbaum Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The break-even point in unit sales is closest to:

Remmel 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 400 units, the net operating income would be closest to:

The engineering approach to the analysis of mixed costs involves a detailed statistical analysis of cost behavior using methods that minimize the squared errors.

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.)

Given the following data: The break-even point in dollars is: (Round your intermediate calculations to 2 decimal places.)

The management of Dethlefsen Corporation would like to have a better understanding of the behavior of its inspection costs. The company has provided the following data: Management believes that inspection cost is a mixed cost that depends on direct labor-hours. Required: Estimate the variable cost per direct labor-hour and the fixed cost per month using the high-low method.

A manufacturer of cedar shingles has supplied the following data: The company's break-even in unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)

Maruska Corporation has provided the following data concerning its only product: The margin of safety as a percentage of sales is closest to:

A cement manufacturer has supplied the following data: If the company increases its unit sales volume by 4% without increasing its fixed expenses, then total net operating income should be closest to: (Round your intermediate calculations to 2 decimal places.)

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

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:

A manufacturer of tiling grout has supplied the following data: The company's break-even in unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)

Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total variable manufacturing cost per unit is: (Round your intermediate calculations to 2 decimal places.)

Electrical costs at one of Rome Corporation's factories are listed below: Management believes that electrical cost is a mixed cost that depends on machine-hours.Using the high-low method, the estimate of the fixed component of electrical cost per month is closest to: (Round your intermediate calculations to 2 decimal places.)

A company that makes organic fertilizer has supplied the following data: The company's unit contribution margin is closest to: (Round your intermediate calculations to 2 decimal places.)

Wenstrom Corporation produces and sells a single product. Data concerning that product appear below: The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.)

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?

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?