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Exam 4: Cost-Volume-Profit Relationships

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Question 71

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If Q equals the level of output,P is the selling price per unit,V is the variable expense per unit,and F is the fixed expense,then the break-even point in units is:

A) Q $\div$ (P-V) .
B) F $\div$ (P-V) .
C) V $\div$ (P-V) .
D) F $\div$ [Q(P-V) ].

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

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Question 72

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Break-even analysis assumes that:

A) total costs are constant.
B) the average fixed expense per unit is constant.
C) the average variable expense per unit is constant.
D) variable expenses are nonlinear.

E) B) and D)
F) B) and C)

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Question 73

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

Kuhner Corporation produces and sells two products. Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $33,100. -The break-even point for the entire company is closest to:

The contribution margin ratio of Lime Corporation's only product is 75%.The company's monthly fixed expense is $688,500 and the company's monthly target profit is $20,000.The dollar sales to attain that target profit is closest to:

Evergreen Corp. has provided the following data: -The number of units needed to achieve a target net operating income of $49,500 would be:

Labor-intensive: Unit sales to break even = Fixed expenses $\div$ Unit CM = ($1,320,000 + $500,000) $\div$ ($30 per unit - $17.60 per unit - $2 per unit) = $1,820,000 $\div$ $10.40 per unit = 175,000 units

Jackson Company's operating results for last year are given below: -If the company's fixed expenses decrease by 20% next year,the break-even point will change from its previous level by:

Kuhner Corporation produces and sells two products. Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $33,100. -If the sales mix were to shift toward Product B64P with total dollar sales remaining constant,the overall break-even point for the entire company:

Heckaman 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!

A tile manufacturer has supplied the following data: -If the company increases its unit sales volume by 3% without increasing its fixed expenses,then total net operating income should be closest to:

Montgomery Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $239,000 per month.The company is currently selling 3,000 units per month.The marketing manager would like to cut the selling price by $12 and increase the advertising budget by $12,000 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?

Budget data for the Bidwell Company are as follows: -The number of units Bidwell would have to sell to earn a net operating income of $150,000 is:

Weiss Corporation produces two models of wood chairs, Colonial and Early American. The Colonial sells for $60 per chair and the Early American sells for $80 per chair. Variable expenses for each model are as follows: Total fixed expenses are $39,600 per month. Expected monthly sales are: Colonial, 1,800 units; Early American, 600 units. -If the sales mix and sales units are as expected,the break-even in sales dollars is closest to:

The break-even point in units can be obtained by dividing total fixed expenses by the contribution margin ratio.

Colen Corporation produces and sells a single product.In January,the company sold 1,700 units.Its total sales were $153,000,its total variable expenses were $79,900,and its total fixed expenses were $56,800. Required: a.Construct the company's contribution format income statement for January in good form. b.Redo the company's contribution format income statement assuming that the company sells 1,600 units.

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

A company that makes organic fertilizer has supplied the following data: -The company's degree of operating leverage is closest to:

Churchwell Corporation produces and sells a single product.Data concerning that product appear below: Required: a.Assume the company's monthly target profit is $69,000.Determine the unit sales to attain that target profit.Show your work! b.Assume the company's monthly target profit is $41,400.Determine the dollar sales to attain that target profit.Show your work!

Dagnan Corporation produces and sells a single product whose contribution margin ratio is 66%.The company's monthly fixed expense is $667,920 and the company's monthly target profit is $72,600. Required: Determine the dollar sales to attain the company's target profit.Show your work!