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Exam 6: Cost-Volume-Profit Relationship

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Question 1

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At the break-even point, variable expenses and fixed expenses are equal.

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Question 2

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Steckelberg Inc. produces and sells a single product. The selling price of the product is $150.00 per unit and its variable cost is $54.00 per unit. The fixed expense is $154,560 per month. The break-even in monthly unit sales is closest to:

A) 1,610
B) 1,030
C) 1,834
D) 2,862

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Question 3

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Seyal Inc.'s contribution margin ratio is 55% and its fixed monthly expenses are $34,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $94,000?

Boettner Corporation produces and sells a single product. In April, the company sold 9,700 units. Its total sales were $543,200, its total variable expenses were $329,800, and its total fixed expenses were $182,200. Required: a. Construct the company's contribution format income statement for April in good form. b. Redo the company's contribution format income statement assuming that the company sells 10,100 units.

Sullens Inc, which produces and sells a single product, has provided its contribution format income statement for July. -If the company sells 8,600 units, its total contribution margin should be closest to:

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

Pedaci Corporation produces and sells a single product. Data concerning that product appear below: -Assume the company's monthly target profit is $15,000. The unit sales to attain that target profit is closest to:

Fietsam Corporation's only product sells for $120 per unit. Its current sales are 43,400 units and its break-even sales are 37,324 units. Required: Compute the margin of safety in both dollars and as a percentage of sales.

Yundt Corporation produces and sells a single product. Data concerning that product appear below: Required: Determine the monthly break-even in total dollar sales. Show your work!

Bello Corporation produces and sells two products. In the most recent month, Product D99P had sales of $33,000 and variable expenses of $15,840. Product G71P had sales of $42,000 and variable expenses of $4,410. The fixed expenses of the entire company were $49,790. -If the sales mix were to shift toward Product D99P with total sales remaining constant, the overall break-even point for the entire company:

Austin Manufacturing had the following operating data for the year just ended. Management plans to improve the quality of its only product by: (1) replacing a component that costs $3.50 with a higher-grade component that costs $5.50; and (2) renting a packing machine for $18,000 a year. If the desired target profit is $288,000, the company must sell:

Forest Corporation has prepared the following budgeted data based on a sales forecast of $3,000,000: What would be the amount of dollar sales at the break-even point?

Isaza Corporation produces and sells two products. In the most recent month, Product U82U had sales of $28,000 and variable expenses of $13,440. Product P89W had sales of $18,000 and variable expenses of $7,260. And the fixed expenses of the entire company were $24,650. If the sales mix were to shift toward Product U82U with total sales remaining constant, the overall break-even point for the entire company:

The profit in cost-volume-profit equations is the same as the net operating income on a contribution income statement.

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

Boening Enterprises, Inc., produces and sells a single product whose selling price is $130.00 per unit and whose variable expense is $39.00 per unit. The company's monthly fixed expense is $509,600. -Assume the company's monthly target profit is $22,000. The dollar sales to attain that target profit is closest to:

The following is last month's contribution format income statement: What is the company's degree of operating leverage?

Data concerning Vogelgesang Corporation's single product appear below: The break-even in monthly dollar sales is closest to:

Hooper Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to these two products: The company's total monthly fixed cost is $15,000. -The break-even in sales dollars for the expected sales mix is closest to:

Finestra Corporation produces a single product that it currently sells for $10. Fixed expenses are $120,000 for the year and variable expenses are $6 per unit. In addition, Finestra's salespersons are paid a commission of 10% of their sales. -A customer has just approached Finestra to make a special, one-time purchase of 10,000 units. These units would not be sold by the salespeople, and therefore no commission would have to be paid. The price Finestra would have to charge on this special order to earn an additional profit of $40,000 is: