Exam 4: Cost-Volume-Profit Relationships

Robledo Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $625,000 per month. The company is currently selling 9,000 units per month. Consider each of the following questions independently. -This question is to be considered independently of all other questions relating to Robledo Corporation.Refer to the original data when answering this question. The marketing manager believes that a $7,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

Swem Corporation makes a product that sells for $110 per unit.The product's current sales are 17,700 units and its break-even sales are 14,337 units. Required: Compute the margin of safety in both dollars and as a percentage of sales.

Drake Company's contribution format income statement for the most recent year appears below: -The sales manager is convinced that a $60,000 expenditure on advertising will increase unit sales by 50% without any other increase in fixed expenses.If the sales manager is correct,the company's net operating income would increase by:

Evergreen Corp. has provided the following data: -The contribution margin ratio is:

The difference between total sales in dollars and total variable expenses is called:

Data concerning Carlo Corporation's single product appear below: The break-even in monthly dollar sales is closest to:

Data concerning Moscowitz Corporation's single product appear below: Fixed expenses are $375,000 per month.The company is currently selling 8,000 units per month.The marketing manager would like to cut the selling price by $15 and increase the advertising budget by $23,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 3,100 units.What should be the overall effect on the company's monthly net operating income of this change?

Smotherman Corporation produces and sells a single product. Data concerning that product appear below: -The break-even in monthly unit sales is closest to:

The break-even point in unit sales is found by dividing total fixed expenses by:

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

Hunter Corporation sells a product for $180 per unit. The product's current sales are 34,900 units and its break-even sales are 25,128 units. -The margin of safety as a percentage of sales is closest to:

The following data pertain to last month's operations: The break-even point in dollars is:

Suermann Corporation's only product sells for $140 per unit.Its current sales are 17,500 units and its break-even sales are 14,350 units. Required: Compute the margin of safety in both dollars and as a percentage of sales.

Tapp Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $226,000 per month.The company is currently selling 2,000 units per month. Required: The marketing manager would like to cut the selling price by $12 and increase the advertising budget by $13,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 200 units.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

Madengrad Company manufactures a single product called a densimeter. This product is a density monitoring device attached to large industrial mixing machines used in flour, rubber, petroleum, and chemical manufacturing. A densimeter sells for $900 per unit. The following variable expenses are incurred to produce and sell each densimeter: Madengrad's annual fixed expenses are $6,600,000. -The annual sales volume required for Madengrad Company to break-even is:

Tanigawa Inc.has an operating leverage of 8.7.If the company's sales increase by 8%,its net operating income should increase by about:

Butteco Corporation has provided the following cost data for last year when 100,000 units were produced and sold: All costs are variable except for $100,000 of manufacturing overhead and $100,000 of selling and administrative expense.There are no beginning or ending inventories.If the selling price is $10 per unit,the net operating income from producing and selling 110,000 units would be:

Data concerning Homme Corporation's single product appear below:The company is currently selling 2,000 units per month. Fixed expenses are $130,000 per month. Consider each of the following questions independently. -This question is to be considered independently of all other questions relating to Homme 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 $14 per unit.In exchange,the sales staff would accept a decrease in their salaries of $24,000 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 100 units.What should be the overall effect on the company's monthly net operating income of this change?

Penury Company offers two products.At present,the following represents the usual results of a month's operations: Required: a.Find the break-even point in dollars. b.Find the margin of safety in dollars. c.The company is considering decreasing product K's unit sales to 80,000 and increasing product L's unit sales to 180,000,leaving unchanged the selling price per unit,variable expense per unit,and total fixed expenses.Would you advise adopting this plan? d.Refer to (c)above.Under the new plan,find the break-even point in dollars. e.Under the new plan in (c)above,find the margin of safety in dollars.

In September,Pino Corporation sold 2,100 units of its only product.Its total sales were $195,300,its total variable expenses were $84,000,and its total fixed expenses were $98,700. Required: a.Construct the company's contribution format income statement for September in good form. b.Redo the company's contribution format income statement assuming that the company sells 2,300 units.