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Exam 6: Cost-Volume-Profit Relationships

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Question 101

Multiple Choice

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The degree of operating leverage is closest to:

A) 0.23
B) 0.10
C) 4.35
D) 9.76

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Question 102

Multiple Choice

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Assume the company's target profit is $8,000.The dollar sales to attain that target profit is closest to:

A) $596,111
B) $1,532,857
C) $852,723
D) $429,200

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Question 103

Multiple Choice

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Assume the company's target profit is $16,000.The dollar sales to attain that target profit is closest to:

If the company's sales increase by 19%, its net operating income should increase by about:

The break-even point for the entire company is closest to:

If the company's sales increase by 7%, its net operating income should increase by about:

Cobble Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $499,000 per month.The company is currently selling 5,000 units per month.The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $33,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 900 units.What should be the overall effect on the company's monthly net operating income of this change?

Caneer Corporation produces and sells a single product.Data concerning that product appear below: The unit sales to attain the company's monthly target profit of $44,000 is closest to:

The company's contribution margin ratio is closest to:

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!

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:

Variable expenses for Alpha Corporation are 40% of sales.What are sales at the break-even point, assuming that fixed expenses total $150,000 per year:

Ferkil Corporation manufacturers a single product that has a selling price of $100 per unit.Fixed expenses total $225,000 per year, and the company must sell 5,000 units to break even.If the company has a target profit of $67,500, sales in units must be:

Escareno Corporation has provided its contribution format income statement for June.The company produces and sells a single product. If the company sells 8,200 units, its total contribution margin should be closest to:

The margin of safety in dollars is closest to:

Incremental analysis is an analytical approach that focuses only on those revenues and costs that will not change as a result of a decision.

Chovanec Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $521,000 per month.The company is currently selling 7,000 units per month.Management is considering using a new component that would increase the unit variable cost by $6.Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units.What should be the overall effect on the company's monthly net operating income of this change?

Data concerning Bedwell Enterprises Corporation's single product appear below: The unit sales to attain the company's monthly target profit of $17,000 is closest to:

Duve Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. If the selling price increases by $4 per unit and the sales volume decreases by 200 units, the net operating income would be closest to:

The break-even in monthly dollar sales is closest to: