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Exam 5: Cost-Volume-Profit Relationships

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Question 61

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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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Question 62

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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%

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

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Question 63

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

An increase in the number of units sold will decrease a company's break-even point.

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:

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.

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:

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!

A company that makes organic fertilizer has supplied the following data: -The company's unit contribution margin is closest to:

Junior Bodway, Inc., has provided the following budgeted data: -How many units would the company have to sell in order to have a net operating income of $40,000?

A tile manufacturer has supplied the following data: -What is the company's unit contribution margin?

Which of the following is true regarding the contribution margin ratio of a company that produces only a single product?

Which of the following statements is correct with regard to a CVP graph?

Thornbrough Corporation produces and sells a single product with the following characteristics: The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month. Consider each of the following questions independently. -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?

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:

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.

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?

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?

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.

Houpe Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $490,000 per month. The company is currently selling 6,000 units per month. Consider each of the following questions independently. -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?