Barnes Company sells three products: A,B,and C.Budgeted sales by product and in total for the coming month are as follows: $\begin{array}{|l|r|r|r|r|} \hline & \text { Product A } && \text { Product B } & \\ \hline \% \text { of total sales } & 48 \% & & 20 \% & \\ \hline \text { Sales } & \$ 240,000 & 100 \% & \$ 100,000 & 100 \% \\\hline \text { Variable exp. } & \underline{72,000} & \underline{30 \%} & 80,000 & 80 \% \\\hline \begin{array}{l} \text { Contrbution } \\ \text { margin } \end{array} & \$ 168,000 & \mathbf{7 0 \%} & \$ 20,000 & 20 \% \\ \hline \text { Fixed expense } & & & &\\ \hline \end{array}$ $\begin{array}{|l|r|r|r|r|} \hline & \text { Product C } & & \text { Total } & \\ \hline \text { \% of total sales } & 32 \% & & 100 \% & \\ \hline \text { Sales } & \$ 160,000 & 100 \% & \$ 500,000 & 100 \% \\ \hline \text { Variable exp. } & 88,000 & 55 \% & 240,000 & 48 \% \\\hline \begin{array}{l} \text { Contribution } \\ \text { margin } \end{array} & \$ 72,000 & \underline{45 \%} & \$ 260,000 & 52 \% \\ \hline \text { Fixed expense } & & & \underline{223,600} \\\hline \text { Operating income } & & & \$ 36,400 \\ \hline \end{array}$ \[\begin{array} { | l | l | r | } \hline \text { Break-even sales - } & \text { Fixed Experises } = & \text { \$223,600 } = \$ 430,000 \\ \text { Budgeted: } & \\ \hline & \text { CM Ratio } & 0.52\\ \hline \end{array}\] As shown by these data,operating income is budgeted at $36,400 for the month,and break-even sales at $430,000. Assume that actual sales for the month total $500,000 as planned.Actual sales by product are: A $160,000 B $200,000 C $140,000 Required: a)Prepare a contribution income statement for the month based on actual sales data.Assume variable expenses as a percentage of sales and total fixed expenses are the same as budgeted.Present the income statement in the format shown in the images above. b)Compute break-even sales for the month,based on actual data. c)Explain why the company did not meet the budgeted operating results or break-even sales even though it met its $500,000 sales budget.

a) @#IMG-DLM& @#IMG-DLM& b)Break-even sales: @#IMG-DLM& c)Despite th

The following is Allison Corporation's contribution format income statement for last month: $\begin{array}{|l|r|} \hline \text { Sales } & \$ 800,000 \\ \hline \text { Less: variable expenses } & \underline{300,000} \\ \hline \text { Contribution margin } & 500,000 \\ \hline \text { Less: fixed expenses } & \underline{400,000} \\ \hline \text { Operating income } & \$ 100,000 \\ \hline \end{array}$The company has no beginning or ending inventories. The company produced and sold 10,000 units last month. -If sales increase by 200 units,by how much should before-tax profits increase?

A) $16,000. B) $5,000. C) $2,000. D) $10,000. A) $16,000. B) $5,000. C) $2,000. D) $10,000.

Hooper Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to these two products: $\begin{array} {| l | r | r | } \hline & \text { Standard } & \text { Deluxe } \\ \hline \text { Selling price per unit } & \$ 150 & \$ 165 \\ \hline \text { Variable production costs } & \$ 120 & \$ 126 \\ \hline \begin{array} { l } \text { Variable selling expense per } \\ \text { unit } \end{array} & \$ 16 & \$ 13 \\ \hline \begin{array} { l } \text { Expected monthly sales in } \\ \text { units } \end{array} & 600 & 1,200 \\ \hline \begin{array} { l } \text { Total monthly fixed cost } \\ \text { (common in both) } \end{array} & & \$ 15,000 \\ \hline \end{array}$ -If the expected monthly sales in units were divided equally between the two models (900 Standard and 900 Deluxe),where would the break-even level of sales be as compared to the expected sales mix?

A) The same as with the expected sales mix. B) Higher than with the expected sales mix. C) Lower than with the expected sales mix. D) Cannot be determined with the available data. A) The same as with the expected sales mix. B) Higher than with the expected sales mix. C) Lower than with the expected sales mix. D) Cannot be determined with the available data.

Junsin Corporation's budget for next year appears below. The budget assumes the company will sell 30,000 units. $\begin{array}{|l|r|r|} \hline \text { Sales } & & \$ 600,000 \\ \hline \text { Less: expenses } & & \\ \hline \text { Variable } & \$ 390,000 & \\ \hline \text { Fixed } & \$ 140,000& \$ 530,000 \\ \hline \text { Operating income } & & \$ 70,000 \\ \hline \end{array}$ -What is the break-even point in annual sales dollars?

A) $530,000. B) $350,000. C) $460,000. D) $400,000. A) $530,000. B) $350,000. C) $460,000. D) $400,000.

Paxton Corp has provided the following data concerning its operations last month: $\begin{array} { | l | r | } \hline \text { Sales } & \$ 400,000 \\ \hline \text { Variable expenses } & \$ 250,000 \\ \hline \text { Fixed expenses } & \$ 100,000 \\ \hline \end{array}$Paxton Corp is a retailing organization. -What is the contribution margin ratio?

A) 12.5%. B) 33.0%. C) 25.0%. D) 37.5%. A) 12.5%. B) 33.0%. C) 25.0%. D) 37.5%.

The following is Allison Corporation's contribution format income statement for last month: $\begin{array}{|l|r|} \hline \text { Sales } & \$ 800,000 \\ \hline \text { Less: variable expenses } & \underline{300,000} \\ \hline \text { Contribution margin } & 500,000 \\ \hline \text { Less: fixed expenses } & \underline{400,000} \\ \hline \text { Operating income } & \$ 100,000 \\ \hline \end{array}$The company has no beginning or ending inventories. The company produced and sold 10,000 units last month. -What is the company's break-even sales in dollars?

A) $0. B) $640,000. C) $700,000. D) $400,000. A) $0. B) $640,000. C) $700,000. D) $400,000.

Exam 4: Cost-Volume-Profit Relationships

Last year,Perry Company reported profits of $4,200.Its total variable expenses were $66,000,or $6 per unit.The unit contribution margin was $3.00.What is the break-even point in units for Perry Company?

(Multiple Choice)

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Question 101

Assuming no change in cost behaviour as volume increases, DOL will decrease June CM = 8,000 * 10.30 = 82,400 DOL = 82,400/(82,400 - 80,000) = 34.33. For July = (10,000 * 10.30)/(10,000 * 10.30 - 80,000) = 4.477. -The degree of operating leverage for July is closest to which of the following?

(Multiple Choice)

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Question 102

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?

(Multiple Choice)

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Question 103

The following monthly budgeted data are available for the International Company: Product A Product B Product C Sales \ 500,000 \ 300,000 \ 900,000 Variable expenses 210,000 Contribution margin \ 200,000 \ 90,000 \ 180,000 Budgeted operating income for the month is $220,000. Required: a)Calculate the break-even sales for the month. b)Calculate the margin of safety. c)Calculate the degree of operating leverage.

(Essay)

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Question 104

Barnes Company sells three products: A,B,and C.Budgeted sales by product and in total for the coming month are as follows: Product A Product B \% of total sales 48\% 20\% Sales \ 240,000 100\% \ 100,000 100\% Variable exp. 80,000 80\% Contrbution margin \ 168,000 \ 20,000 20\% Fixed expense Product C Total \% of total sales 32\% 100\% Sales \ 160,000 100\% \ 500,000 100\% Variable exp. 88,000 55\% 240,000 48\% Contribution margin \ 72,000 \ 260,000 52\% Fixed expense Operating income \ 36,400 Break-even sales - Fixed Experises = \2 23,600 =\ 430,000 Budgeted: CM Ratio 0.52 As shown by these data,operating income is budgeted at $36,400 for the month,and break-even sales at $430,000. Assume that actual sales for the month total $500,000 as planned.Actual sales by product are: A $160,000 B $200,000 C $140,000 Required: a)Prepare a contribution income statement for the month based on actual sales data.Assume variable expenses as a percentage of sales and total fixed expenses are the same as budgeted.Present the income statement in the format shown in the images above. b)Compute break-even sales for the month,based on actual data. c)Explain why the company did not meet the budgeted operating results or break-even sales even though it met its $500,000 sales budget.

(Essay)

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Question 105

Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800. -What is the break-even point in sales dollars?

(Multiple Choice)

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Question 106

Koby Co.has sales of $200,000 with variable expenses of $150,000,fixed expenses of $60,000,and a net loss of $10,000.How much would Koby have to sell in order to achieve an operating income of 10% of sales?

(Multiple Choice)

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Question 107

Curtis Company anticipates selling 10,000 units next year.The company wants to earn an operating income equal to 10% of sales.If variable expenses are $12 per unit,and fixed expenses total $78,000 per year,what selling price must be established to achieve the desired level of operating income?

(Multiple Choice)

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Question 108

A shift in the sales mix from products with a low contribution margin ratio toward products with a high contribution margin ratio will lower the break-even point in the company as a whole.

(True/False)

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Question 109

If sales increase from $80,000 per year to $120,000 per year,and if the degree of operating leverage is 5,then by what percentage should operating income increase?

(Multiple Choice)

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Question 110

The contribution margin ratio always increases when which of the following occurs?

(Multiple Choice)

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Question 111

The following is Allison Corporation's contribution format income statement for last month: Sales \ 800,000 Less: variable expenses Contribution margin 500,000 Less: fixed expenses Operating income \ 100,000 The company has no beginning or ending inventories. The company produced and sold 10,000 units last month. -If sales increase by 200 units,by how much should before-tax profits increase?

(Multiple Choice)

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Question 112

Hooper Corporation produces and sells two models of vacuum cleaners, Standard and Deluxe. The company records show the following monthly data relating to these two products: Standard Deluxe Selling price per unit \ 150 \ 165 Variable production costs \ 120 \ 126 Variable selling expense per unit \ 16 \ 13 Expected monthly sales in units 600 1,200 Total monthly fixed cost (common in both) \ 15,000 -If the expected monthly sales in units were divided equally between the two models (900 Standard and 900 Deluxe),where would the break-even level of sales be as compared to the expected sales mix?

(Multiple Choice)

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Question 113

A total of 30,000 units were sold last year.The contribution margin per unit was $2,and total fixed expenses were $20,000 for the year.This year,fixed expenses are expected to increase to $26,000,but the contribution margin per unit will remain unchanged at $2.How many units must be sold this year to earn the same operating income as was earned last year?

(Multiple Choice)

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Question 114

Junsin Corporation's budget for next year appears below. The budget assumes the company will sell 30,000 units. Sales \ 600,000 Less: expenses Variable \ 390,000 Fixed \ 140,000 \ 530,000 Operating income \ 70,000 -What is the break-even point in annual sales dollars?

(Multiple Choice)

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Question 115

Paxton Corp has provided the following data concerning its operations last month: Sales \ 400,000 Variable expenses \ 250,000 Fixed expenses \ 100,000 Paxton Corp is a retailing organization. -What is the contribution margin ratio?

(Multiple Choice)

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Question 116

The following is Allison Corporation's contribution format income statement for last month: Sales \ 800,000 Less: variable expenses Contribution margin 500,000 Less: fixed expenses Operating income \ 100,000 The company has no beginning or ending inventories. The company produced and sold 10,000 units last month. -What is the company's break-even sales in dollars?

(Multiple Choice)

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Question 117

The break-even point in sales for Rice Company is $360,000,and the company's contribution margin ratio is 20%.Its income tax rate is 40%.If Rice Company desires an after-tax operating profit of $84,000,what would total sales have to be?

(Multiple Choice)

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Question 118

Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800. -If the selling price is reduced by 5%,variable expenses reduced by $1.00,and fixed expenses increased to a total of $38,400,how many units would need to be sold to earn an operating income of $21,000?

(Multiple Choice)

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Question 119

The break-even point in unit sales increases when variable expenses do which of the following?

(Multiple Choice)

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Question 120

Last year,Perry Company reported profits of $4,200.Its total variable expenses were $66,000,or $6 per unit.The unit contribution margin was $3.00.What is the break-even point in units for Perry Company?

Assuming no change in cost behaviour as volume increases, DOL will decrease June CM = 8,000 * 10.30 = 82,400 DOL = 82,400/(82,400 - 80,000) = 34.33. For July = (10,000 * 10.30)/(10,000 * 10.30 - 80,000) = 4.477. -The degree of operating leverage for July is closest to which of the following?

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?

Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800. -What is the break-even point in sales dollars?

Koby Co.has sales of $200,000 with variable expenses of $150,000,fixed expenses of $60,000,and a net loss of $10,000.How much would Koby have to sell in order to achieve an operating income of 10% of sales?

Curtis Company anticipates selling 10,000 units next year.The company wants to earn an operating income equal to 10% of sales.If variable expenses are $12 per unit,and fixed expenses total $78,000 per year,what selling price must be established to achieve the desired level of operating income?

A shift in the sales mix from products with a low contribution margin ratio toward products with a high contribution margin ratio will lower the break-even point in the company as a whole.

If sales increase from $80,000 per year to $120,000 per year,and if the degree of operating leverage is 5,then by what percentage should operating income increase?

The contribution margin ratio always increases when which of the following occurs?

Junsin Corporation's budget for next year appears below. The budget assumes the company will sell 30,000 units. Sales \ 600,000 Less: expenses Variable \ 390,000 Fixed \ 140,000 \ 530,000 Operating income \ 70,000 -What is the break-even point in annual sales dollars?

Paxton Corp has provided the following data concerning its operations last month: Sales \ 400,000 Variable expenses \ 250,000 Fixed expenses \ 100,000 Paxton Corp is a retailing organization. -What is the contribution margin ratio?

The break-even point in sales for Rice Company is $360,000,and the company's contribution margin ratio is 20%.Its income tax rate is 40%.If Rice Company desires an after-tax operating profit of $84,000,what would total sales have to be?

The break-even point in unit sales increases when variable expenses do which of the following?

Managerial Accounting and the Business Environment

Cost Terms,concepts,and Classifications

Cost Behaviour: Analysis and Use

Systems Design: Job-Order Costing

Systems Design: Process Costing

Activity-Based Costing: A Tool to Aid Decision Making

Variable Costing: A Tool for Management

Budgeting

Standard Costs and Overhead Analysis

Reporting for Control

Relevant Costs for Decision Making

Capital Budgeting Decisions

Financial Statement Analysis

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