Exam 2: Cost-Volume-Profit Relationships

Froio Corporation produces and sells two products.Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $26, 570. If the sales mix were to shift toward Product M06M with total sales remaining constant, the overall break-even point for the entire company:

Hartung Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $147, 000 per month.The company is currently selling 2, 000 units per month.The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $13 per unit.In exchange, the sales staff would accept a decrease in their salaries of $22, 000 per month.(This is the company's savings for the entire sales staff. )The marketing manager predicts that introducing this sales incentive would increase monthly sales by 400 units.What should be the overall effect on the company's monthly net operating income of this change?

If Q equals the level of output, P is the selling price per unit, V is the variable expense per unit, and F is the fixed expense, then the degree of operating leverage is equal to:

Buccheri Corporation produces and sells a single product.Data concerning that product appear below: Required: Determine the monthly break-even in unit sales.Show your work!

Boenisch Corporation produces and sells a single product with the following characteristics: The company is currently selling 8, 000 units per month.Fixed expenses are $406, 000 per month.Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Boenisch Corporation.Refer to the original data when answering this question. 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 a decrease in their salaries of $102, 000 per month.(This is the company's savings for the entire sales staff. )The marketing manager predicts that introducing this sales incentive would increase monthly sales by 700 units.What should be the overall effect on the company's monthly net operating income of this change?

Boenisch Corporation produces and sells a single product with the following characteristics: The company is currently selling 8, 000 units per month.Fixed expenses are $406, 000 per month.Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Boenisch Corporation.Refer to the original data when answering this question. Management is considering using a new component that would increase the unit variable cost by $3.Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units.What should be the overall effect on the company's monthly net operating income of this change?

One way to compute the total contribution margin is to deduct total fixed expenses from net operating income.

Spartan Systems reported total sales of $300, 000, at a price of $20 and per unit variable expenses of $12, for the sales of their single product. What is the amount of contribution margin if sales volume increases by 30%?

A manufacturer of cedar shingles has supplied the following data: The company's degree of operating leverage is closest to:

At the break-even point, the total contribution margin and fixed expenses are equal.

Last year Easton Corporation reported sales of $720, 000, a contribution margin ratio of 30% and a net loss of $24, 000.Based on this information, the break-even point was:

Smee Inc.produces and sells a single product.The selling price of the product is $130.00 per unit and its variable cost is $52.00 per unit.The fixed expense is $281, 580 per month. The break-even in monthly unit sales is closest to:

The margin of safety in dollars equals the excess of actual sales over budgeted sales.

Moccio Enterprises, Inc. , produces and sells a single product whose selling price is $120.00 per unit and whose variable expense is $37.20 per unit.The company's monthly fixed expense is $356, 040. Assume the company's target profit is $15, 000.The dollar sales to attain that target profit is closest to:

Closser Corporation produces and sells two products.In the most recent month, Product M50S had sales of $39, 000 and variable expenses of $12, 870.Product H50G had sales of $12, 000 and variable expenses of $4, 980.The fixed expenses of the entire company were $33, 050.The break-even point for the entire company is closest to:

The margin of safety is:

Sammis Inc, which produces and sells a single product, has provided its contribution format income statement for January. If the company sells 2, 500 units, its net operating income should be closest to:

Upchurch Corporation produces and sells a single product.Data concerning that product appear below: Assume the company's target profit is $12, 000.The unit sales to attain that target profit is closest to:

The overall contribution margin ratio for a company producing three products may be obtained by adding the contribution margin ratios for the three products and dividing the total by three.

Data concerning Wythe Corporation's single product appear below: Fixed expenses are $106, 000 per month.The company is currently selling 2, 000 units per month.The marketing manager would like to cut the selling price by $15 and increase the advertising budget by $5, 000 per month.The marketing manager predicts that these two changes would increase monthly sales by 800 units.What should be the overall effect on the company's monthly net operating income of this change?