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Exam 5: Cost-Volume-Profit Relationships

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Question 41

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

A) True
B) False

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Question 42

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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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Because fixed expenses are no...

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Question 43

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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:

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!

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?

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 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.

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?

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!

Maziarz Corporation produces and sells a single product. Data concerning that product appear below: -Assume the company's target profit is $16,000.The dollar sales to attain that target profit is closest to:

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!

Heathman Inc. produces and sells a single product. The selling price of the product is $230.00 per unit and its variable cost is $89.70 per unit. The fixed expense is $308,660 per month. -The break-even in monthly dollar sales is closest to:

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:

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:

Shambo 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:

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:

Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product. -If the company sells 9,100 units,its total contribution margin should be 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!

Kelsay Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. -The company's contribution margin ratio is closest to:

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: