Exam 4: Cost-Volume-Profit Relationships

Data concerning Runnells Corporation's single product appear below: The company is currently selling 6,000 units per month.Fixed expenses are $424,000 per month.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?

A manufacturer of cedar shingles has supplied the following data: -The company's break-even in bundles is closest to:

Henning Corporation produces and sells two models of hair dryers, Standard and Deluxe. The company has provided the following data relating to these two products: The company's total monthly fixed expense is $13,800. -The break-even in sales dollars for the expected sales mix is (rounded):

Which of the following formulas is used to calculate the contribution margin ratio?

South Company sells a single product for $20 per unit.If variable expenses are 60% of sales and fixed expenses total $9,600,the break-even point will be:

Weiss Corporation produces two models of wood chairs, Colonial and Early American. The Colonial sells for $60 per chair and the Early American sells for $80 per chair. Variable expenses for each model are as follows: Total fixed expenses are $39,600 per month. Expected monthly sales are: Colonial, 1,800 units; Early American, 600 units. -The contribution margin per chair for the Colonial model is:

The following is Allison Corporation's contribution format income statement for last month: The company has no beginning or ending inventories. The company produced and sold 10,000 units last month. -How many units would the company have to sell to attain target profits of $120,000?

Laro Corporation produces and sells a single product with the following characteristics:The company is currently selling 5,000 units per month. Fixed expenses are $302,000 per month. Consider each of the following questions independently. -This question is to be considered independently of all other questions relating to Laro 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 110 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

Reynold Enterprises sells a single product for $25.The variable expense per unit is $15 and the fixed expense per unit is $5 at the current level of sales.The company's net operating income will increase by $5 if one more unit is sold.

The January contribution format income statement of Brotherton Corporation appears below: The degree of operating leverage is closest to:

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

The contribution margin ratio is 30% for the Honeyville Company and the break-even point in sales is $150,000.If the company's target net operating income is $60,000,sales would have to be:

Data concerning Maline Corporation's single product appear below: Fixed expenses are $55,000 per month.The company is currently selling 1,000 units per month. Required: The marketing manager would like to cut the selling price by $6 and increase the advertising budget by $2,700 per month.The marketing manager predicts that these two changes would increase monthly sales by 100 units.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

A tile manufacturer has supplied the following data: -What is the company's unit contribution margin?

At a sales level of $90,000,Blue Company's contribution margin is $24,000.If the degree of operating leverage is 6 at a $90,000 sales level,net operating income must equal:

Delreal Corporation has provided the following data concerning its only product: -The margin of safety as a percentage of sales is closest to:

Gardner Furniture Company produces two kinds of chairs: an oak model and a chestnut wood model. The oak model sells for $60 and the chestnut wood model sells for $100. The variable expenses are as follows: Expected sales in units next year are: 5,000 oak chairs and 1,000 chestnut chairs. Fixed expenses are budgeted at $135,000 per year. -The company's overall contribution margin ratio for the expected sales mix is:

The following is last month's contribution format income statement: What is the company's margin of safety percentage to the nearest whole percent?

Toye Corporation has provided its contribution format income statement for March. -The degree of operating leverage is closest to:

The Herald Company manufactures and sells a single product which sells for $50 per unit and has a contribution margin ratio of 30%.The company's monthly fixed expenses are $25,000.If Herald desires a monthly target net operating income equal to 20% of sales dollars,sales in units will have to be (rounded):