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Exam 5: Cost-Volume-Profit Relationships

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Question 91

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Your boss would like you to estimate the fixed and variable components of a particular cost. Actual data for this cost over four recent periods appear below. Using the least-squares regression method, what is the cost formula for this cost?

A) Y = $73.71 + $8.98X
B) Y = $0.00 + $15.79X
C) Y = $81.61 + $8.64X
D) Y = $87.04 + $5.88X

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

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Question 92

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Heathman Incorporated produces and sells a single product. The selling price of the product is $230.00 per unit and its variable cost is $89.70 per unit. The fixed expense is $308,660 per month.The break-even in monthly unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)

A) 2,328 units
B) 1,342 units
C) 3,441 units
D) 2,200 units

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

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Question 93

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Gayne Corporation's contribution margin ratio is 12% and its fixed monthly expenses are $84,000. If the company's sales for a month are $738,000, what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change.

Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following: Using the high-low method of analysis, what are the company's estimated total fixed selling and administrative expenses per year? (Round your intermediate calculations to 2 decimal places.)

Keomuangtai Corporation produces and sells a single product. The company has provided its contribution format income statement for October. If the company sells 4,200 units, its net operating income should be closest to:

A soft drink bottler incurred the following factory utility cost: $9,246 for 5,200 cases bottled and $8,997 for 4,900 cases bottled. Factory utility cost is a mixed cost containing both fixed and variable components. The variable factory utility cost per case bottled is closest to:

Grawburg Incorporated maintains a call center to take orders, answer questions, and handle complaints. The costs of the call center for a number of recent months are listed below: Management believes that the cost of the call center is a mixed cost that depends on the number of calls taken.Required:Estimate the variable cost per call and fixed cost per month using the least-squares regression method.

Data concerning Bedwell Enterprises Corporation's single product appear below: The unit sales to attain the company's monthly target profit of $18,000 is closest to: (Do not round intermediate calculations.)

Duve Corporation has provided the following contribution format income statement. Assume that the following information is 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:

If the degree of operating leverage is 4, then a one percent change in quantity sold should result in a four percent change in:

One of Matthew Corporation's competitors has learned that Matthew has a total expense per unit of $1.50 at the 15,000 unit level of activity and total expense per unit of $1.45 at the 20,000 unit level of activity. Assume that the relevant range includes all of the activity levels mentioned in this problem.What would be the competitor's prediction of variable cost per unit for Matthew Corporation?

In the most recent month, Sardella Corporation's total contribution margin was $46,200 and its net operating income $13,200.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 10% increase in sales volume.

Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product. If the company sells 9,100 units, its total contribution margin should be closest to:

Lacourse Incorporated's inspection costs are listed below: Management believes that inspection cost is a mixed cost that depends on units produced.Using the least-squares regression method, the estimate of the fixed component of inspection cost per month is closest to:

Thornbrough Corporation produces and sells a single product with the following characteristics: The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month.The marketing manager would like to cut the selling price by $18 and increase the advertising budget by $53,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,000 units. What should be the overall effect on the company's monthly net operating income of this change?

Hevesy Incorporated produces and sells a single product. The selling price of the product is $200.00 per unit and its variable cost is $80.00 per unit. The fixed expense is $300,000 per month. The break-even in monthly unit sales is closest to:

Decaprio Incorporated produces and sells a single product. The company has provided its contribution format income statement for June. If the company sells 6,800 units, its net operating income should be closest to: (Do not round intermediate calculations.)

Data concerning Follick Corporation's single product appear below: The break-even in monthly dollar sales is closest to: (Round your intermediate calculations to 2 decimal places.)

Data concerning Neuner Corporation's single product appear below: Fixed expenses are $425,000 per month. The company is currently selling 4,000 units per month.Required:The marketing manager would like to cut the selling price by $11 and increase the advertising budget by $23,700 per month. The marketing manager predicts that these two changes would increase monthly sales by 400 units. What should be the overall effect on the company's monthly net operating income of this change?

Mcdale Incorporated produces and sells two products. Data concerning those products for the most recent month appear below: The fixed expenses of the entire company were $39,080. The break-even point for the entire company is closest to: