Exam 6: Cost-Volume-Profit Relationships

Alcina Corporation produces and sells a single product whose contribution margin ratio is 80%.The company's monthly fixed expense is $576,000 and the company's monthly target profit is $43,200. Required: Determine the dollar sales to attain the company's target profit.Show your work!

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:

Dybala Corporation produces and sells a single product.Data concerning that product appear below: The company is currently selling 5,000 units per month.Fixed expenses are $173,000 per month.The marketing manager believes that a $6,000 increase in the monthly advertising budget would result in a 170 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

Bowe Corporation's fixed monthly expenses are $21,000 and its contribution margin ratio is 61%.Assuming that the fixed monthly expenses do not change,what is the best estimate of the company's net operating income in a month when sales are $74,000?

Bohlen Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $716,000 per month.The company is currently selling 6,000 units per month.Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Bohlen Corporation.Refer to the original data when answering this question. The marketing manager believes that a $20,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

Gaskey Inc.expects its sales in February to be $173,000.The company's contribution margin ratio is 58% and its fixed monthly expenses are $94,000. Required: Estimate the company's net operating income for February,assuming that the fixed monthly expenses do not change.Show your work!

Chibu Corporation is a single product firm with the following cost formula for all of its costs for next year,where X is the number of units sold and Y is total cost: Y = $225,000 + $30X Chibu sells its product for $120 per unit.What would Chibu's total sales dollars have to be next year in order to generate $270,000 of net operating income?

Lepage Corporation has provided its contribution format income statement for January.The company produces and sells a single product. If the company sells 4,700 units,its total contribution margin should be closest to:

Darwin Inc.sells a particular textbook for $20.Variable expenses are $14 per book.At the current volume of 50,000 books sold per year the company is just breaking even.Given these data,the annual fixed expenses associated with the textbook total:

Sammis Inc. ,which produces and sells a single product,has provided its contribution format income statement for January. If the company sells 2,600 units,its total contribution margin should be closest to:

Data concerning Marchman Corporation's single product appear below: The company is currently selling 4,000 units per month.Fixed expenses are $166,000 per month.Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Marchman 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 $2.Since the new component would increase the features of the company's product,the marketing manager predicts that monthly sales would increase by 200 units.What should be the overall effect on the company's monthly net operating income of this change?

A company that makes organic fertilizer has supplied the following data: The company's margin of safety in units is closest to:

A company that makes organic fertilizer has supplied the following data: The company's unit contribution margin is closest to:

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:

Grable Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $628,000 per month.The company is currently selling 5,000 units per month. Required: The marketing manager would like to cut the selling price by $18 and increase the advertising budget by $45,000 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? Show your work!

Moallankamp Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $1,131,000 per month.The company is currently selling 7,000 units per month. Required: The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $20 per unit.In exchange,the sales staff would accept an overall decrease in their salaries of $117,000 per month.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? Show your work!

Palomo Corporation sells a product for $170 per unit.The product's current sales are 35,200 units and its break-even sales are 25,344 units.The margin of safety as a percentage of sales is closest to:

The degree of operating leverage in a company is largest at the break-even point and decreases as sales rise.

Steeler Corporation is planning to sell 100,000 units for $2.00 per unit and will break even at this level of sales.Fixed expenses will be $75,000.What are the company's variable expenses per unit?

The break-even in units sold will decrease if there is an increase in: