Exam 4: Cost-Volume-Profit Relationships

Loren Company's single product has a selling price of $15 per unit.Last year,the company reported total variable expenses of $180,000,fixed expenses of $90,000,and an operating income of $30,000.A study by the sales manager discloses that a 15% increase in the selling price would reduce unit sales by 10%.If her proposal is adopted,what would the outcome be for operating income?

What is the break-even point in sales dollars? Refer To: 04-05

Austin Manufacturing had the following operating data for the year just ended: Management plans to improve the quality of its only product by replacing a component that costs $3.50 with a higher-grade component that costs $5.50,and renting a packing machine for $18,000 a year.If the desired target operating profit is $288,000,how many units must the company sell?

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.

The break-even in units sold will decrease if there is an increase in which of the following?

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

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

If the company's fixed costs decrease by 20% next year,all other factors remaining the same,by how much will the break-even level change compared to that of the current year,rounded to the nearest whole unit?

What is the overall contribution margin ratio for the company as a whole,rounded to the nearest tenth of a percent?

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

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?

What is the contribution margin ratio for the book?

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

What is the degree of operating leverage?

Green Company's variable expenses are 75% of sales.At a sales level of $400,000,the company's degree of operating leverage is 8.At this sales level,fixed expenses equal which of the following?

Once the break-even point is reached,which of the following statements is true?

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?

What is the company's break-even in units?

The following monthly data are available for the Eager Company and its only product: What was the margin of safety for the company for March?

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