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Exam 6: Cost-Volume-Profit Relationships

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Question 81

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Veren Inc.produces and sells two products.During the most recent month, Product F73A's sales were $27,000 and its variable expenses were $9,450.Product L75P's sales were $14,000 and its variable expenses were $5,310.The company's fixed expenses were $21,060. 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 F73A with no change in total sales, what will happen to the break-even point for the company? Explain.

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_TB2627_00 Overall CM ratio = Total cont...

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Question 82

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What is the company's unit contribution margin?

A) $0.86 per unit
B) $2.35 per unit
C) $4.10 per unit
D) $1.75 per unit

E) A) and B)
F) A) and C)

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Question 83

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Warbler Gift's reported the following information for the sales of their single product: Warbler's salesmen have proposed to decrease the selling price by 50 cents per unit.How many units will need to be sold for Warbler to earn at least the same net operating income?

If the company increases its unit sales volume by 3% without increasing its fixed expenses, then total net operating income should be closest to:

How many units would the company have to sell in order to have a net operating income equal to 5% of total sales dollars?

Assume the company's target profit is $12,000.The dollar sales to attain that target profit is closest to:

Steffen Corporation has three products with the following characteristics: The overall contribution margin ratio for the company as a whole is closest to:

Mcquage Corporation has provided its contribution format income statement for July. 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 19% increase in sales.

This question is to be considered independently of all other questions relating to Thornbrough 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 $11.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?

Brancati Inc.produces and sells two products.Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $32,860. 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 W07C with no change in total sales, what will happen to the break-even point for the company? Explain.

Decaprio Inc.produces and sells a single product.The company has provided its contribution format income statement for June. If the company sells 9,200 units, its net operating income should be closest to:

Sannella Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $991,000 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 $11 per unit.In exchange, the sales staff would accept a decrease in their salaries of $74,000 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 200 units.What should be the overall effect on the company's monthly net operating income of this change?

Dickus Corporation's only product sells for $100 per unit.Its current sales are 35,600 units and its break-even sales are 29,192 units. Required: Compute the margin of safety in both dollars and as a percentage of sales.

Majid Corporation sells a product for $240 per unit.The product's current sales are 41,300 units and its break-even sales are 36,757 units. What is the margin of safety in dollars?

Cassius Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The number of units that must be sold to achieve a target profit of $31,500 is closest to:

This question is to be considered independently of all other questions relating to Lemelin 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 $3.Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 200 units.What should be the overall effect on the company's monthly net operating income of this change?

Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January. If the company sells 4,600 units, its total contribution margin should be closest to:

Assume the company's target profit is $17,000.The unit sales to attain that target profit is closest to:

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.

The total volume in sales dollars that would be required to attain a given target profit is determined by dividing the target profit by the contribution margin ratio.