Exam 8: Standard Costs

Wilson Company prepared the following preliminary budget assuming no advertising expenditures: Based on a market study,the company estimated that it could increase the unit selling price by 15% and increase the unit sales volume by 10% if $100,000 were spent on advertising.Assuming that these changes are incorporated in its budget,what should be the budgeted net income?

What is the company's contribution margin ratio?

If fixed expenses increase by $10,000 per year,then the level of sales needed to break even will also increase by $10,000.

If sales decrease by 500 units by next month,by how much would fixed expenses have to be reduced to maintain the current net income?

Carver Company produces a product that sells for $30.Variable manufacturing costs are $15 per unit.Fixed manufacturing costs are $5 per unit based on the current level of activity,and fixed selling and administrative costs are $4 per unit.A selling commission of 10% of the selling price is paid on each unit sold.The contribution margin per unit is?

The following monthly data are available for the Phelps Company: The break-even sales for the month for the company are:

What is the company's degree of operating leverage?

The following monthly data are available for the Challenger Company and its only product,Product SW:

Roberts Company sells a single product at a selling price of $55 per unit.Variable costs are $30.25 per unit and fixed costs are $113,850.Roberts Company's break-even point is?

Using absorption costing,what is the net income for January?

Dodero Company produces a single product that sells for $100 per unit.Fixed expenses total $12,000 per month,and variable expenses are $60 per unit.The company's sales average 500 units per month.Which of the following statements is correct?

Gerber Company is planning to sell 200,000 units for $2.00 a unit and will just break even at this level of sales.The contribution margin ratio is 25%.What are the company's fixed expenses?

Scott Company's variable expenses are 72% of sales.The company's break-even point in sales is $2,450,000.If sales are $60,000 below the break-even point,the company would report a:

The following is Arkadia Corporation's contribution format income statement for last month:

What is the company's margin of safety in dollars?

If the company's sales volume increases by 30% next year,all other factors remaining the same,its net income will increase by:

If the company wants to increase its total contribution margin by 40% in the next year,all other factors remaining the same,it will need to increase its sales by:

Jimbob Co.is a manufacturing company with the following results for a three year period:

A product sells for $20 per unit,and has a contribution margin ratio of 40%.Fixed expenses total $120,000 annually.How many units must be sold to yield a profit of $30,000?

If two companies produce the same product and have the same total sales and same total expenses,operating leverage will be lower in the company with a higher proportion of fixed expenses in its cost structure.