Question 1

The company's degree of operating leverage is closest to:

Accepted Answer

A) 11.25 
B) 25.88 
C) 1.99 
D) 75.38 
A) 11.25 
B) 25.88 
C) 1.99 
D) 75.38

Question 2

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

Accepted Answer

A) unit contribution margin. 
B) revenue. 
C) variable expense. 
D) net operating income. 
A) unit contribution margin. 
B) revenue. 
C) variable expense. 
D) net operating income.

Question 3

If the company sells 9,100 units, its total contribution margin should be closest to:

Accepted Answer

A) $174,500 
B) $192,000 
C) $52,135 
D) $182,000 
A) $174,500 
B) $192,000 
C) $52,135 
D) $182,000

Question 4

Data concerning Kardas Corporation's single product appear below:   The company is currently selling 8,000 units per month.Fixed expenses are $719,000 per month.The marketing manager believes that a $20,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

A) decrease of $160 
B) increase of $20,160 
C) decrease of $20,000 
D) increase of $160 
A) decrease of $160 
B) increase of $20,160 
C) decrease of $20,000 
D) increase of $160

Question 5

What is the company's break-even point in sales dollars?

Accepted Answer

A) $450,000 
B) $180,000 
C) $300,000 
D) $500,000 
A) $450,000 
B) $180,000 
C) $300,000 
D) $500,000

Question 6

Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 5% increase in sales is closest to:

Accepted Answer

A) 0.29% 
B) 87.50% 
C) 0.11% 
D) 218.75% 
A) 0.29% 
B) 87.50% 
C) 0.11% 
D) 218.75%

Question 7

Sattler Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range.   Required:
a.What is the contribution margin per unit?
b.What is the variable expense ratio?
c.If sales decline to 7,900 units, what would be the estimated net operating income?
d.If the variable cost per unit increases by $5, spending on advertising increases by $2,000, and unit sales increase by 3,400 units, what would be the estimated net operating income?
e.What is the break-even point in dollar sales?
f.Estimate how many units must be sold to achieve a target profit of $50,400.
g.What is the margin of safety percentage?
h.Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

Accepted Answer

a. @#IMG-DLM&_TB2627_00 Alternatively, @#IMG-DLM&_TB2627_00

Question 8

Sarratt Corporation's contribution margin ratio is 62% and its fixed monthly expenses are $91,000.Assume that the company's sales for May are expected to be $193,000.

Required:
Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change.Show your work!

Accepted Answer

Profit = (CM ratio × Sales)- F

Question 9

A $2.00 increase in a product's variable expense per unit accompanied by a $2.00 increase in its selling price per unit will:

Accepted Answer

A) decrease the degree of operating leverage. 
B) decrease the contribution margin. 
C) have no effect on the break-even volume. 
D) have no effect on the contribution margin ratio. 
A) decrease the degree of operating leverage. 
B) decrease the contribution margin. 
C) have no effect on the break-even volume. 
D) have no effect on the contribution margin ratio.

Question 10

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

Accepted Answer

A) total profit equals total expenses. 
B) contribution margin is negative. 
C) a loss occurs. 
D) variable expenses equal contribution margin. 
A) total profit equals total expenses. 
B) contribution margin is negative. 
C) a loss occurs. 
D) variable expenses equal contribution margin.

Question 11

Data concerning Pellegren Corporation's single product appear below:   Fixed expenses are $531,000 per month.The company is currently selling 4,000 units per month.The marketing manager would like to cut the selling price by $14 and increase the advertising budget by $35,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 500 units.What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

A) decrease of $18,000 
B) increase of $38,000 
C) decrease of $38,000 
D) increase of $58,000 
A) decrease of $18,000 
B) increase of $38,000 
C) decrease of $38,000 
D) increase of $58,000

Question 12

If the variable expense per unit decreases, and all other factors remain the same, the contribution margin ratio will increase.

Accepted Answer

A) True 
 B)False

Question 13

If the company sells 4,200 units, its net operating income should be closest to:

Accepted Answer

A) $17,600 
B) $23,009 
C) $25,200 
D) $2,000 
A) $17,600 
B) $23,009 
C) $25,200 
D) $2,000

Question 14

Hawver Corporation produces and sells a single product.Data concerning that product appear below:   Required:
Assume the company's monthly target profit is $19,800.Determine the unit sales to attain that target profit.Show your work!

Accepted Answer

@#IMG-DLM&_TB2627_00 Unit sales to attai

Question 15

Malensek International, Inc., produces and sells a single product.The product sells for $240.00 per unit and its variable expense is $55.20 per unit.The company's monthly fixed expense is $249,480.
Required:
Determine the monthly break-even in total dollar sales.Show your work!

Accepted Answer

@#IMG-DLM&_TB2627_00 Dollar sa

Question 16

Langin Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range.   Required:
a.What is the margin of safety percentage? 
b.Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

Accepted Answer

a.CM ratio = Contribution margin ÷ Sales

Question 17

The company's contribution margin ratio is closest to:

Accepted Answer

A) 28.9% 
B) 63.9% 
C) 71.1% 
D) 36.1% 
A) 28.9% 
B) 63.9% 
C) 71.1% 
D) 36.1%

Question 18

Serfass Corporation's contribution format income statement for July appears below:   The degree of operating leverage is closest to:

Accepted Answer

A) 0.05 
B) 0.15 
C) 21.31 
D) 6.89 
A) 0.05 
B) 0.15 
C) 21.31 
D) 6.89

Question 19

Hamiel Corporation produces and sells a single product.Data concerning that product appear below:    Fixed expenses are $301,000 per month.The company is currently selling 5,000 units per month.
Required:
The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $16 per unit.In exchange, the sales staff would accept an overall decrease in their salaries of $68,000 per month.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? Show your work!

Accepted Answer

The answer of Hamiel Corporation produces and sells a single...

Question 20

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:

Accepted Answer

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

The company's degree of operating leverage is 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:

If the company sells 9,100 units, its total contribution margin should be closest to:

What is the company's break-even point in sales dollars?

Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 5% increase in sales is closest to:

Sarratt Corporation's contribution margin ratio is 62% and its fixed monthly expenses are $91,000.Assume that the company's sales for May are expected to be $193,000. Required: Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change.Show your work!

A $2.00 increase in a product's variable expense per unit accompanied by a $2.00 increase in its selling price per unit will:

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

If the variable expense per unit decreases, and all other factors remain the same, the contribution margin ratio will increase.

If the company sells 4,200 units, its net operating income should be closest to:

Hawver Corporation produces and sells a single product.Data concerning that product appear below: Required: Assume the company's monthly target profit is $19,800.Determine the unit sales to attain that target profit.Show your work!

Malensek International, Inc., produces and sells a single product.The product sells for $240.00 per unit and its variable expense is $55.20 per unit.The company's monthly fixed expense is $249,480. Required: Determine the monthly break-even in total dollar sales.Show your work!

The company's contribution margin ratio is closest to:

Serfass Corporation's contribution format income statement for July appears below: The degree of operating leverage is closest to:

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:

Managerial Accounting and Cost Concepts

Job-Order Costing: Calculating Unit Product Costs

Job-Order Costing: Cost Flows and External Reporting

Activity-Based Costing

Process Costing6 Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Performance Measurement in Decentralized Organizations

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Flexible Budgets Standard Costs and Variance Analysis

Statement of Cash Flows

Financial Statement Analysis

Job-Order Costing: Cost Flows and External Reporting

Process Costing6 Cost-Volume-Profit Relationships

Cost-Volume-Profit Relationships

Flexible Budgets, Standard Costs, and Variance Analysis

Flexible Budgets, Standard Costs, and Variance Analysis

A Capital Budgeting Decisions

A Statement of Cash Flows

Filters

Exam 6: Cost-Volume-Profit Relationships

The company's degree of operating leverage is 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:

If the company sells 9,100 units, its total contribution margin should be closest to:

What is the company's break-even point in sales dollars?

Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 5% increase in sales is closest to:

A $2.00 increase in a product's variable expense per unit accompanied by a $2.00 increase in its selling price per unit will:

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

If the variable expense per unit decreases, and all other factors remain the same, the contribution margin ratio will increase.

If the company sells 4,200 units, its net operating income should be closest to:

Hawver Corporation produces and sells a single product.Data concerning that product appear below: Required: Assume the company's monthly target profit is $19,800.Determine the unit sales to attain that target profit.Show your work!

Malensek International, Inc., produces and sells a single product.The product sells for $240.00 per unit and its variable expense is $55.20 per unit.The company's monthly fixed expense is $249,480. Required: Determine the monthly break-even in total dollar sales.Show your work!

The company's contribution margin ratio is closest to:

Serfass Corporation's contribution format income statement for July appears below: The degree of operating leverage is closest to:

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:

Managerial Accounting and Cost Concepts

Job-Order Costing: Calculating Unit Product Costs

Job-Order Costing: Cost Flows and External Reporting

Activity-Based Costing

Process Costing6 Cost-Volume-Profit Relationships

Variable Costing and Segment Reporting: Tools for Management

Master Budgeting

Performance Measurement in Decentralized Organizations

Differential Analysis: The Key to Decision Making

Capital Budgeting Decisions

Flexible Budgets Standard Costs and Variance Analysis

Statement of Cash Flows

Financial Statement Analysis

Job-Order Costing: Cost Flows and External Reporting

Process Costing6 Cost-Volume-Profit Relationships

Cost-Volume-Profit Relationships

Flexible Budgets, Standard Costs, and Variance Analysis

Flexible Budgets, Standard Costs, and Variance Analysis

A Capital Budgeting Decisions

A Statement of Cash Flows

Filters