Exam 6: Cost-Volume-Profit Relationships

Brown Corporation has sales of 2,000 units at $70 per unit.Variable expenses are 40% of the selling price.If total fixed expenses are $44,000,the degree of operating leverage is:

The unit sales volume necessary to reach a target profit is determined by dividing the sum of the fixed expenses and the target profit by the contribution margin per unit.

Upchurch Corporation produces and sells a single product.Data concerning that product appear below: Assume the company's target profit is $14,000.The dollar sales to attain that target profit is closest to:

Data concerning Sumter Corporation's single product appear below: Fixed expenses are $1,024,000 per month.The company is currently selling 8,000 units per month. Required: Management is considering using a new component that would increase the unit variable cost by $6.Since the new component would improve the company's product,the marketing manager predicts that monthly sales would increase by 300 units.What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected? Show your work!

Solen Corporation's break-even-point in sales is $900,000,and its variable expenses are 75% of sales.If the company lost $32,000 last year,sales must have amounted to:

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

Gonyo Inc. ,which produces and sells a single product,has provided the following contribution format income statement for December: Required: Redo the company's contribution format income statement assuming that the company sells 3,400 units.

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

The following is Arkadia Corporation's contribution format income statement for last month: The company has no beginning or ending inventories and produced and sold 20,000 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 net operating income increase? d.How many units would the company have to sell to attain a target profit of $125,000? e.What is the company's margin of safety in dollars? f.What is the company's degree of operating leverage?

Buentello Corporation produces and sells a single product.The company's contribution format income statement for January appears below: Required: Redo the company's contribution format income statement assuming that the company sells 1,600 units.

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?

The Agate Corporation manufactures and sells two types of bookcases,standard and deluxe.Agate expects the following operating results next year for each type of bookcase: Agate expects to have a total of $57,600 in fixed expenses next year.What is Agate's break-even point next year in sales dollars?

Minist Corporation sells a single product for $15 per unit.Last year,the company's sales revenue was $225,000 and its net operating income was $18,000.If fixed expenses totaled $72,000 for the year,the break-even point in unit sales was:

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

Hitchens Inc.produces and sells two products.Data concerning those products for the most recent month appear below: The fixed expenses of the entire company were $24,010.The break-even point for the entire company is closest to:

In the most recent month,Shoemaker Corporation's total contribution margin was $29,600 and its net operating income $3,000. Required: a.Compute the degree of operating leverage to two decimal places. b.Using the degree of operating leverage,estimate the percentage change in net operating income that should result from a 10% increase in sales.

Torbert,Inc. ,produces and sells a single product.The product sells for $190.00 per unit and its variable expense is $72.20 per unit.The company's monthly fixed expense is $353,400. Required: Determine the monthly break-even in unit sales.Show your work!

A tile manufacturer has supplied the following data: The company's contribution margin ratio is closest to:

Data concerning Cutshall Enterprises Corporation's single product appear below: The unit sales to attain the company's monthly target profit of $16,000 is closest to:

Mason Enterprises has prepared the following budget for the month of July: Assuming that total fixed expenses will be $150,000 and the sales mix remains constant,the break-even point would be closest to: