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Exam 5: Cost-Volume-Profit Relationships

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Question 31

Multiple Choice

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A tile manufacturer has supplied the following data: -If the company increases its unit sales volume by 3% without increasing its fixed expenses,then total net operating income should be closest to:

A) $459,380
B) $453,667
C) $13,380
D) $482,660

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

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Question 32

Multiple Choice

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

A) 3,111
B) 6,892
C) 4,040
D) 13,525

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

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Question 33

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Hamernik,Inc.,produces and sells a single product whose selling price is $240.00 per unit and whose variable expense is $72.00 per unit.The company's fixed expense is $372,960 per month. Required: Determine the monthly break-even in either unit or total dollar sales.Show your work!

Stonebraker Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required: a.If sales increase to 9,040 units,what would be the estimated increase in net operating income? b.If the variable cost per unit increases by $6,spending on advertising increases by $3,000,and unit sales increase by 19,200 units,what would be the estimated net operating income? j.Estimate how many units must be sold to achieve a target profit of $26,100.

When expressed on a per unit basis,fixed costs can mislead decision makers into thinking of them as variable costs.

Mcconkey Corporation produces and sells a single product.The company's contribution format income statement for July appears below: Required: Redo the company's contribution format income statement assuming that the company sells 5,800 units.

Mio Canoe Livery rents canoes and transports canoes and customers to and from their canoe trip on a local river.The trip is priced at $20 per person and has a CM ratio of 30%.Mio's fixed expenses are $84,000.Last year,sales were $400,000 and profit was $36,000.How many units need to be sold to break-even,and how many need to be sold to earn a profit of $42,000?

Kelsay Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. -What is the company's unit contribution margin?

Sebree 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:

Jilk Inc.'s contribution margin ratio is 58% and its fixed monthly expenses are $36,000.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 $103,000?

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

Mancine Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required: a.What is the break-even point in unit sales? b.Estimate how many units must be sold to achieve a target profit of $50,000.

Junior Bodway, Inc., has provided the following budgeted data: -What is the company's break-even point in sales dollars?

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. 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?

If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit,the break-even point in units will:

Nussbaum Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. -The break-even point in unit sales is closest to:

Junior Bodway, Inc., has provided the following budgeted data: -At the budgeted sales level of 10,000 units,what is the company's degree of operating leverage?

A decrease in the number of units sold will decrease the break-even point.

Dietrick Corporation produces and sells two products. Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $42,550. -The break-even point for the entire company is closest to:

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.