Question 1

On a cost-volume-profit graph, the break-even point is located:

Accepted Answer

A)  at the origin. 
B)  where the total revenue line intersects the volume axis. 
C)  where the total expenses line intersects the dollars axis. 
D)  where the total revenue line intersects the total expenses line. 
A)  at the origin. 
B)  where the total revenue line intersects the volume axis. 
C)  where the total expenses line intersects the dollars axis. 
D)  where the total revenue line intersects the total expenses line.

Question 2

A product sells for $20 per unit, and has a contribution margin ratio of 40%. Fixed expenses are $120,000. How many units must be sold to yield a profit of $30,000?

Accepted Answer

A)  18,750 
B)  20,000 
C)  25,000 
D)  12,500 
A)  18,750 
B)  20,000 
C)  25,000 
D)  12,500

Question 3

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

Accepted Answer

A)  0.09 
B)  11.34 
C)  4.13 
D)  0.24 
A)  0.09 
B)  11.34 
C)  4.13 
D)  0.24

Question 4

Valesquez Corporation's operating leverage is 8.6. If the company's sales increase by 17%, its net operating income should increase by about:

Accepted Answer

A)  8.6% 
B)  50.6% 
C)  17.0% 
D)  146.2% 
A)  8.6% 
B)  50.6% 
C)  17.0% 
D)  146.2%

Question 5

Gruen Corporation produces and sells a single product. Data concerning that product appear below:   
Fixed expenses are $505,000 per month. The company is currently selling 5,000 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 $16 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $65,000 per month. 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? Show your work!

Accepted Answer

The answer of Gruen Corporation produces and sells a single...

Question 6

Logiudice Inc. has provided the following data concerning its only product:   
Required:
Compute the margin of safety in both dollars and as a percentage of sales.

Accepted Answer

The answer of Logiudice Inc. has provided the following data...

Question 7

Dorian Company produces and sells a single product. The product sells for $60 per unit and has a contribution margin ratio of 40%. The company's monthly fixed expenses are $28,800.
-If the selling price is reduced by 5%, variable expenses reduced by $1.00, and fixed expenses increased to a total of $38,400, how many units would need to be sold to earn a net operating income of $21,000?

Accepted Answer

A)  1,000 
B)  2,700 
C)  1,700 
D)  2,950 
A)  1,000 
B)  2,700 
C)  1,700 
D)  2,950

Question 8

Hounshell Corporation produces and sells a single product. Data concerning that product appear below:   
Required:
a. Assume the company's monthly target profit is $20,880. Determine the unit sales to attain that target profit. Show your work!
b. Assume the company's monthly target profit is $6,960. Determine the dollar sales to attain that target profit. Show your work!

Accepted Answer

@#IMG-DLM& a. Unit sales to attain target profit =

Question 9

Similien Corporation produces and sells a single product. Data concerning that product appear below:  
Fixed expenses are $300,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $14 and increase the advertising budget by $17,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,400 units. What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

A)  increase of $64,200 
B)  increase of $215,400 
C)  decrease of $64,200 
D)  decrease of $5,800 
A)  increase of $64,200 
B)  increase of $215,400 
C)  decrease of $64,200 
D)  decrease of $5,800

Question 10

Data concerning Sa Corporation's single product appear below:  
Fixed expenses are $445,000 per month. The company is currently selling 6,000 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 $9 per unit. In exchange, the sales staff would accept a decrease in their salaries of $43,000 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?

Accepted Answer

A)  decrease of $88,900 
B)  decrease of $2,900 
C)  increase of $42,100 
D)  increase of $537,100 
A)  decrease of $88,900 
B)  decrease of $2,900 
C)  increase of $42,100 
D)  increase of $537,100

Question 11

Data concerning Sotero Corporation's single product appear below:   The company is currently selling 5,000 units per month. Fixed expenses are $319,000 per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Sotero Corporation. Refer to the original data when answering this question.
The marketing manager would like to cut the selling price by $7 and increase the advertising budget by $20,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 500 units. What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

A)  increase of $46,500 
B)  decrease of $18,500 
C)  decrease of $16,500 
D)  increase of $18,500 
A)  increase of $46,500 
B)  decrease of $18,500 
C)  decrease of $16,500 
D)  increase of $18,500

Question 12

Harist Corporation sold 5,000 units in May. Sales were $400,000, variable expenses were $240,000, and fixed expenses were $120,000. If the company increases its selling price by 10%, how many units would have to be sold in June to generate a profit of $40,000?

Accepted Answer

A)  4,200 
B)  4,500 
C)  4,000 
D)  5,000 
A)  4,200 
B)  4,500 
C)  4,000 
D)  5,000

Question 13

Wertman Corporation produces and sells a single product with the following characteristics:   The company is currently selling 3,000 units per month. Fixed expenses are $215,000 per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Wertman 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 $5. 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?

Accepted Answer

A)  increase of $15,800 
B)  decrease of $15,800 
C)  increase of $800 
D)  decrease of $800 
A)  increase of $15,800 
B)  decrease of $15,800 
C)  increase of $800 
D)  decrease of $800

Question 14

Zents Inc. produces and sells a single product. The selling price of the product is $240.00 per unit and its variable cost is $108.00 per unit. The fixed expense is $407,880 per month.
The break-even in monthly dollar sales is closest to:

Accepted Answer

A)  $685,293 
B)  $741,600 
C)  $906,400 
D)  $407,880 
A)  $685,293 
B)  $741,600 
C)  $906,400 
D)  $407,880

Question 15

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

Accepted Answer

A)  8,101 
B)  3,352 
C)  4,190 
D)  16,760 
A)  8,101 
B)  3,352 
C)  4,190 
D)  16,760

Question 16

Hinsey Corporation produces and sells a single product. Data concerning the product appear below:   Fixed expenses are $300,000 per month. The company is currently selling 4,000 units per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Hinsey 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 $11. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

A)  decrease of $38,500 
B)  increase of $5,500 
C)  increase of $38,500 
D)  decrease of $5,500 
A)  decrease of $38,500 
B)  increase of $5,500 
C)  increase of $38,500 
D)  decrease of $5,500

Question 17

Data concerning Uthe Corporation's single product appear below:   
Fixed expenses are $522,000 per month. The company is currently selling 6,000 units per month.
Required:
The marketing manager would like to cut the selling price by $19 and increase the advertising budget by $30,900 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,600 units. What should be the overall effect on the company's monthly net operating income of this change? Show your work!

Accepted Answer

The answer of Data concerning Uthe Corporation's single product appear...

Question 18

Sullens Inc, which produces and sells a single product, has provided its contribution format income statement for July.  
-If the company sells 8,300 units, its net operating income should be closest to:

Accepted Answer

A)  $23,924 
B)  $21,900 
C)  $24,500 
D)  $18,700 
A)  $23,924 
B)  $21,900 
C)  $24,500 
D)  $18,700

Question 19

Lynn Corporation produces and sells a single product. Data concerning that product appear below:   
Fixed expenses are $387,000 per month. The company is currently selling 7,000 units per month.
Required:
Management is considering using a new component that would increase the unit variable cost by $3. 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!

Accepted Answer

@#IMG-DLM& Since fixed expenses are not

Question 20

A manufacturer of tiling grout has supplied the following data:  
-The company's contribution margin ratio is closest to:

Accepted Answer

A)  28.9% 
B)  63.9% 
C)  71.1% 
D)  36.1% 
A)  28.9% 
B)  63.9% 
C)  71.1% 
D)  36.1%

Exam 6: Cost-Volume-Profit Relationship

On a cost-volume-profit graph, the break-even point is located:

A product sells for $20 per unit, and has a contribution margin ratio of 40%. Fixed expenses are $120,000. How many units must be sold to yield a profit of $30,000?

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

Valesquez Corporation's operating leverage is 8.6. If the company's sales increase by 17%, its net operating income should increase by about:

Logiudice Inc. has provided the following data concerning its only product: Required: Compute the margin of safety in both dollars and as a percentage of sales.

Harist Corporation sold 5,000 units in May. Sales were $400,000, variable expenses were $240,000, and fixed expenses were $120,000. If the company increases its selling price by 10%, how many units would have to be sold in June to generate a profit of $40,000?

Zents Inc. produces and sells a single product. The selling price of the product is $240.00 per unit and its variable cost is $108.00 per unit. The fixed expense is $407,880 per month. The break-even in monthly dollar sales is closest to:

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

Sullens Inc, which produces and sells a single product, has provided its contribution format income statement for July. -If the company sells 8,300 units, its net operating income should be closest to:

A manufacturer of tiling grout has supplied the following data: -The company's contribution margin ratio is closest to:

Managerial Accounting and the Business Environment

Managerial Accounting and Cost Concepts

Systems Design: Job-Order Costing

Systems Design: Process Costing

Cost Behavior Analysis and Use

Variable Costing: a Tool for Management

Activity Based Costing: a Tool to Aid Decision-Making

Profit Planning

Flexible Budgets and Performance Analysis

Standard Costs and Operating Performance Measures

Segment Reporting, Decentralization, and the Balanced Scorecard

Relevant Costs for Decision Making

Capital Budgeting Decisions

How Well Am I Doing Statement of Cash Flows

How Well Am I Doing Financial Statement Analysis

Pricing Products and Services

Profitability Analysis

Further Classification of Labor Costs

Cost of Quality

the Predetermined Overhead Rate and Capacity

Fifo Method

Service Department Allocations

Least-Squares Regression Computations

Abc Action Analysis

Using a Modified Form of Activity-Based Costing to

Predetermined Overhead Rates and Overhead Analysis

Journal Entries to Record Variances

Transfer Pricing

Service Department Charges

The Concept of Present Value

Income Taxes in Capital Budgeting Decisions

The Direct Method of Determining the Net Cash Provided by

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