Exam 4: Cost-Volume-Profit Relationships

Young Company has a margin of safety percentage of 20%.The break-even point is $400,000 and the variable costs are 40% of sales.Given this information,what is the operating income?

The break-even point is closest to which of the following?

If the company's sales volume increases by 30% next year,all other factors remaining the same,by how much will its operating income increase?

Sales = Variable expenses + Fixed expenses + Target operating income $4.50Q = $3.00Q + $120,000 + $0 $1.50Q = $120,000 Q = $120,000/$1.50 = 80,000 units 2.80,000 units x $4.50 = $360,000 3.Sales = Variable expenses + Fixed expenses + Target operating income $4.50Q = $3.00Q + $120,000 + $90,000 $1.50Q = $210,000 Q = $210,000/$1.50 = 140,000 units 4.Margin of safety = Sales - Sales at break-even = $540,000 - $360,000 = $180,000 b)

The degree of operating leverage for July is closest to which of the following?

The following is Alsatia Corporation's contribution format income statement for last month: The company has no beginning or ending inventories and produced and sold 10,000 units during the month. Required: a)What is the company's contribution margin ratio? b)What is the company's break-even in units? c)If sales increase by 100 units,by how much should operating income increase? d)How many units would the company have to sell to attain target operating income of $225,000? e)What is the company's margin of safety in dollars? f)What is the company's degree of operating leverage?

The following is last month's contribution format income statement: What is the company's margin of safety in dollars?

What is the company's margin of safety as a percentage of sales,rounded to the nearest whole percent?

Lindsay Company reported the following results from sales of 5,000 units for the month of June: Assume that Lindsay increases the selling price of the product by 10% on July 1.How many units would have to be sold in July in order to generate an operating income of $20,000?

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

Marling Corporation has budgeted the following data: What is the break-even in sales dollars?

The following is Allison Corporation's contribution format income statement for December 2014: The company had no beginning or ending inventories.The company produced and sold 10,000 units in December. Required: Assuming no change in either the cost structure or the average selling price,prepare a contribution format income statement for a month Allison Corporation reports no before-tax profit or loss:

What is the variable expense per unit?

If company A has a higher degree of operating leverage than company B,then which of the following statements is true?

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?

What is the break-even point in units per year?

North Company sells a single product.The product has a selling price of $30 per unit and variable expenses are 70% of sales.If the company's fixed expenses total $60,000 per year,then what will be its break-even?

A company has sales of $87,500 at the break-even point and fixed costs are $35,000.Assuming cost behaviour does not change if sales increase by $20,000 how much will operating income will increase by?

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

The following monthly budgeted data are available for the International Company: 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.