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Exam 2: Cost-Volume-Profit Relationships

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Question 31

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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:

A) 5, 714
B) 3, 077
C) 3, 597
D) 2, 000

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Question 32

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Lasseter Corporation has provided its contribution format income statement for August.The company produces and sells a single product. If the company sells 3, 900 units, its net operating income should be closest to:

A) $15, 800
B) $21, 600
C) $19, 000
D) $16, 654

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Question 33

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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?

Chibu Corporation is a single product firm with the following cost formula for all of its costs for next year, where X is the number of units sold and Y is total cost: Y = $225, 000 + $30X Chibu sells its product for $120 per unit.What would Chibu's total sales dollars have to be next year in order to generate $270, 000 of net operating income?

Brown Corporation has sales of 2, 000 units at $70 per unit.Variable expenses are 40% of the selling price.If total fixed expenses are $44, 000, the degree of operating leverage is:

Florek Inc.produces and sells a single product.The company has provided its contribution format income statement for March. If the company sells 5, 900 units, its net operating income should be 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.

All other things the same, a reduction in the variable expense per unit will decrease the break-even point.

Moccio Enterprises, Inc. , produces and sells a single product whose selling price is $120.00 per unit and whose variable expense is $37.20 per unit.The company's monthly fixed expense is $356, 040. Assume the company's target profit is $14, 000.The unit sales to attain that target profit is closest to:

Incremental analysis is generally the most complicated and least direct approach to decision making.

Bohlen Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $716, 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 Bohlen Corporation.Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $8.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?

Gaskey Inc.expects its sales in February to be $173, 000.The company's contribution margin ratio is 58% and its fixed monthly expenses are $94, 000. Required: Estimate the company's net operating income for February, assuming that the fixed monthly expenses do not change.Show your work!

Dybala Corporation produces and sells a single product.Data concerning that product appear below: The company is currently selling 5, 000 units per month.Fixed expenses are $173, 000 per month.The marketing manager believes that a $6, 000 increase in the monthly advertising budget would result in a 170 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

If a company decreases the variable expense per unit while increasing the total fixed expenses, the total expense line relative to its previous position will:

Lopp Corporation produces and sells a single product.Data concerning that product appear below: Required: Assume the company's monthly target profit is $38, 280.Determine the unit sales to attain that target profit.Show your work!

Data concerning Hinkson Corporation's single product appear below: Fixed expenses are $720, 000 per month.The company is currently selling 8, 000 units per month.The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $9 per unit.In exchange, the sales staff would accept a decrease in their salaries of $60, 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?

A cement manufacturer has supplied the following data: The company's contribution margin ratio is closest to:

Crumbley Inc.produces and sells two products.Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $42, 760. Required: a.Determine the overall break-even point for the company in total sales dollars.Show your work! b.If the sales mix shifts toward Product W43J with no change in total sales, what will happen to the break-even point for the company? Explain.

Mason Enterprises has prepared the following budget for the month of July: Assuming that total fixed expenses will be $150, 000 and the sales mix remains constant, the break-even point would be closest to:

A manufacturer of tiling grout has supplied the following data: The company's contribution margin ratio is closest to: