Exam 10: Cost-Volume-Profit Relationships

Sales in North Corporation increased from $60,000 per year to $63,000 per year while net operating income increased from $10,000 to $12,000. Given this data, the company's degree of operating leverage must have been:

Data concerning Ulwelling Corporation's single product appear below: Fixed expenses are $753,000 per month. The company is currently selling 8,000 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 $11 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $73,000 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 300 units. What should be the overall effect on the company's monthly net operating income of this change? Show your work!

In December, Mccullum Corporation sold 2,900 units of its only product. Its total sales were $281,300, its total variable expenses were $130,500, and its total fixed expenses were $122,600. Required: a. Construct the company's contribution format income statement for December. b. Redo the company's contribution format income statement assuming that the company sells 3,100 units.

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!

The contribution margin ratio is equal to:

This question is to be considered independently of all other questions relating to Boenisch 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 $3. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change?

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 would like to cut the selling price by $17 and increase the advertising budget by $42,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,000 units. What should be the overall effect on the company's monthly net operating income of this change?

Sanes Corporation produces and sells a single product. Data concerning that product appear below: The unit sales to attain the company's monthly target profit of $19,000 is closest to:

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:

If the company increases its unit sales volume by 5% without increasing its fixed expenses, then total net operating income should be closest to:

Lore Corporation has provided the following information: Lore's break-even point in dollar sales is:

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?

The company's contribution margin ratio is closest to:

Holdt Inc. produces and sells a single product. The selling price of the product is $230.00 per unit and its variable cost is $66.70 per unit. The fixed expense is $212,290 per month. The break-even in monthly unit sales is closest to:

What is the margin of safety in dollars?

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 $10 if one more unit is sold.

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!

A product sells for $10 per unit and has variable expenses of $6 per unit. Fixed expenses total $45,000 per month. How many units of the product must be sold each month to yield a monthly profit of $15,000?

Data concerning Kurek Corporation's single product appear below: Fixed expenses are $190,000 per month. The company is currently selling 4,000 units per month. Required: The marketing manager would like to cut the selling price by $12 and increase the advertising budget by $11,100 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,500 units. What should be the overall effect on the company's monthly net operating income of this change? Show your work!

Eickhoff Corporation's contribution format income statement for the most recent month follows: 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 1% increase in sales.