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Exam 6: Cost-Volume-Profit Relationships

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Question 81

Multiple Choice

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Callicott Corporation produces a product that sells for $120 per unit.The product's current sales are 25,400 units and its break-even sales are 18,542 units. The margin of safety as a percentage of sales is closest to:

A) 27%
B) 37%
C) 63%
D) 73%

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

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Question 82

Multiple Choice

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A manufacturer of premium wire strippers has supplied the following data: The company's margin of safety in units is closest to:

A) 135,429 units
B) 16,923 units
C) 223,333 units
D) 320,317 units

E) All of the above
F) A) and B)

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Question 83

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If two companies produce the same product and have the same total sales and same total expenses,operating leverage will be higher in the company with a higher proportion of fixed expenses in its cost structure.

Blane Corporation produces and sells a single product.Data concerning that product appear below: The break-even in monthly unit sales is closest to:

Gilpatric Corporation produces and sells two products.In the most recent month,Product Q71M had sales of $28,000 and variable expenses of $7,840.Product V04P had sales of $49,000 and variable expenses of $27,580.The fixed expenses of the entire company were $34,630. The break-even point for the entire company is closest to:

Havely International Corporation's only product sells for $200.00 per unit and its variable expense is $70.00.The company's monthly fixed expense is $390,000 per month.The unit sales to attain the company's monthly target profit of $10,000 is closest to:

Boenisch Corporation produces and sells a single product with the following characteristics: The company is currently selling 8,000 units per month.Fixed expenses are $406,000 per month.Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Boenisch Corporation.Refer to the original data when answering this question. The marketing manager would like to cut the selling price by $12 and increase the advertising budget by $30,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 1,800 units.What should be the overall effect on the company's monthly net operating income of this change?

Boenisch Corporation produces and sells a single product with the following characteristics: The company is currently selling 8,000 units per month.Fixed expenses are $406,000 per month.Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Boenisch 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 $16 per unit.In exchange,the sales staff would accept a decrease in their salaries of $102,000 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 700 units.What should be the overall effect on the company's monthly net operating income of this change?

A manufacturer of cedar shingles has supplied the following data: The company's degree of operating leverage is closest to:

The margin of safety in dollars equals the excess of actual sales over budgeted sales.

Eickhoff 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 1% increase in sales.

Smee Inc.produces and sells a single product.The selling price of the product is $130.00 per unit and its variable cost is $52.00 per unit.The fixed expense is $281,580 per month. The break-even in monthly dollar sales is closest to:

Holdt Inc.produces and sells a single product.The selling price of the product is $230.00 per unit and its variable cost is $66.70 per unit.The fixed expense is $212,290 per month.The break-even in monthly unit sales is closest to:

In December,Mccullum Corporation sold 2,900 units of its only product.Its total sales were $281,300,its total variable expenses were $130,500,and its total fixed expenses were $122,600. Required: a.Construct the company's contribution format income statement for December. b.Redo the company's contribution format income statement assuming that the company sells 3,100 units.

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

Buccheri 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!

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

Blackner Corporation produces and sells a single product.Data concerning that product appear below: The break-even in monthly unit sales is closest to:

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 believes that a $6,000 increase in the monthly advertising budget would result in a 130 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

The contribution margin ratio of Donath Corporation's only product is 65%.The company's monthly fixed expense is $573,300 and the company's monthly target profit is $9,100. Required: Determine the dollar sales to attain the company's target profit.Show your work!