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Exam 5: Cost-Volume-Profit Relationships

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Question 121

Multiple Choice

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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:

A) $7,200
B) $12,800
C) $10,400
D) $11,520

E) All of the above
F) None of the above

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Question 122

Multiple Choice

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Northern Pacific Fixtures Corporation sells a single product for $28 per unit.If variable expenses are 65% of sales and fixed expenses total $9,800,the break-even point is:

A) $15,077
B) $18,200
C) $9,800
D) $28,000

E) A) and C)
F) C) and D)

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Question 123

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Rachal Corporation produces and sells a single product whose selling price is $150.00 per unit and whose variable expense is $57.00 per unit.The company's monthly fixed expense is $381,300. Required: a.Assume the company's monthly target profit is $9,300.Determine the unit sales to attain that target profit.Show your work! b.Assume the company's monthly target profit is $18,600.Determine the dollar sales to attain that target profit.Show your work!

If the contribution margin is not sufficient to cover fixed expenses:

Corporation X sold 25,000 units of product last year.The contribution margin per unit was $2,and fixed expenses totaled $40,000 for the year.This year fixed expenses are expected to increase to $45,000,but the contribution margin per unit will remain unchanged at $2.How many units must be sold this year to earn the same net operating income as was earned last year:

How much will a company's net operating income change if it undertakes an advertising campaign given the following data:

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:

A shift in the sales mix from high-margin items to low-margin items can cause total profits to decrease even though total sales may increase.

Data concerning Lemelin Corporation's single product appear below: The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month. Consider each of the following questions independently. -This question is to be considered independently of all other questions relating to Lemelin Corporation.Refer to the original data when answering this question. The marketing manager believes that an $11,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

To obtain the dollar sales volume necessary to attain a given target profit,which of the following formulas should be used?

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

A manufacturer of premium wire strippers has supplied the following data: -The company's margin of safety in units is closest to:

Bendel Inc.has an operating leverage of 7.3.If the company's sales increase by 3%,its net operating income should increase by about:

Bois Corporation has provided its contribution format income statement for January. -If the company's sales increase by 7%,its net operating income should increase by about:

Lydic Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The degree of operating leverage is closest to:

A shift in the sales mix from low-margin items to high-margin items will decrease total profits even though total sales increase.

Shelhorse Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $275,000 per month.The company is currently selling 4,000 units per month. Required: The marketing manager believes that a $13,000 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!

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:

Mossfeet Shoe Corporation is a single product firm.The company is predicting that a price increase next year will not cause unit sales to decrease.What effect would this price increase have on the following items for next year?

Mcdale Inc.produces and sells two products.Data concerning those products for the most recent month appear below: The fixed expenses of the entire company were $18,460.The break-even point for the entire company is closest to: