Question 1

Mason Corporation's selling price was $20 per unit.Fixed expenses totaled $54,000,variable expenses were $14 per unit,and the company reported a profit of $9,000 for the year.The break-even point for Mason Corporation is:

Accepted Answer

A)  10,500 units 
B)  4,500 units 
C)  8,500 units 
D)  9,000 units

Question 2

Zanetti 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)  3,873 units 
B)  1,740 units 
C)  1,201 units 
D)  2,271 units

Question 3

Thornbrough Corporation produces and sells a single product with the following characteristics:
  The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Thornbrough 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)  increase of $82,500 
B)  decrease of $5,500 
C)  decrease of $82,500 
D)  increase of $5,500

Question 4

Iverson Corporation's variable expenses are 60% of sales.At a $400,000 sales level,the degree of operating leverage is 5.If sales increase by $40,000,the new degree of operating leverage will be (rounded):

Accepted Answer

A)  3.67 
B)  2.86 
C)  5.25 
D)  5.00

Question 5

Majid Corporation sells a product for $240 per unit.The product's current sales are 41,300 units and its break-even sales are 36,757 units. What is the margin of safety in dollars?

Accepted Answer

A)  $8,821,680 
B)  $6,608,000 
C)  $9,912,000 
D)  $1,090,320

Question 6

Lofft Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range.  Using the degree of operating leverage,the estimated percent increase in net operating income as the result of a 10% increase in sales is closest to:

Accepted Answer

A)  1.13% 
B)  88.89% 
C)  22.22% 
D)  4.50%

Question 7

Huitron Inc.expects its sales in September to be $143,000.The company's contribution margin ratio is 65% and its fixed monthly expenses are $62,000.
Required:
Estimate the company's net operating income for September,assuming that the fixed monthly expenses do not change.Show your work!

Accepted Answer

The answer of Huitron Inc.expects its sales in September to...

Question 8

Goodman Corporation has sales of 3,000 units at $80 per unit.Variable costs are 35% of the sales price.If total fixed costs are $66,000,the degree of operating leverage is:

Accepted Answer

A)  0.79 
B)  0.93 
C)  2.67 
D)  1.73

Question 9

Data concerning Lemelin Corporation's single product appear below:
  The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month. Consider each of the following questions independently.
-This question is to be considered independently of all other questions relating to Lemelin Corporation.Refer to the original data when answering this question. The marketing manager would like to cut the selling price by $18 and increase the advertising budget by $37,000 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?

Accepted Answer

A)  increase of $118,200 
B)  increase of $302,200 
C)  decrease of $118,200 
D)  decrease of $7,800

Question 10

Incremental analysis is an analytical approach that focuses only on those revenues and costs that will not change as a result of a decision.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  0.27 
B)  6.79 
C)  3.70 
D)  0.15

Question 12

Stauffer Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range.  The variable expense ratio is closest to:

Accepted Answer

A)  60% 
B)  40% 
C)  67% 
D)  33%

Question 13

A company sells two products--J and K.The sales mix is expected to be $3 of sales of Product K for every $1 of sales of Product J.Product J has a contribution margin ratio of 40% whereas Product K has a contribution margin ratio of 50%.Annual fixed expenses are expected to be $120,000.The overall break-even point for the company in dollar sales is expected to be closest to:

Accepted Answer

A)  $196,000 
B)  $200,000 
C)  $252,632 
D)  $263,420

Question 14

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

Accepted Answer

A)  $342,550 
B)  $204,455 
C)  $109,616 
D)  $161,200

Question 15

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%

Question 16

Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product.
 
-If the company sells 9,700 units,its net operating income should be closest to:

Accepted Answer

A)  $57,000 
B)  $55,000 
C)  $55,573 
D)  $58,500

Question 17

In the most recent month,Sardella Corporation's total contribution margin was $46,200 and its net operating income $13,200.
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 10% increase in sales.

Accepted Answer

The answer of In the most recent month,Sardella Corporation's total...

Question 18

Sjostrom Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range.
 
-If the variable cost per unit increases by $10,spending on advertising increases by $1,500,and unit sales increase by 15,800 units,the net operating income would be closest to:

Accepted Answer

A)  $12,500 
B)  $114,100 
C)  $91,200 
D)  $5,700

Question 19

Knezevich Corporation makes a product that sells for $230 per unit.The product's current sales are 36,900 units and its break-even sales are 32,103 units.
Required:
Compute the margin of safety in both dollars and as a percentage of sales.

Accepted Answer

The answer of Knezevich Corporation makes a product that sells...

Question 20

Singapore Candy Cane Corporation is a single product firm with the following cost structure for next year:
 What is the company's break-even point next year in sales dollars?

Accepted Answer

A)  $ 90,000 
B)  $108,000 
C)  $135,000 
D)  $162,000

Exam 5: Cost-Volume-Profit Relationships

Mason Corporation's selling price was $20 per unit.Fixed expenses totaled $54,000,variable expenses were $14 per unit,and the company reported a profit of $9,000 for the year.The break-even point for Mason Corporation is:

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

Iverson Corporation's variable expenses are 60% of sales.At a $400,000 sales level,the degree of operating leverage is 5.If sales increase by $40,000,the new degree of operating leverage will be (rounded) :

Majid Corporation sells a product for $240 per unit.The product's current sales are 41,300 units and its break-even sales are 36,757 units. What is the margin of safety in dollars?

Lofft Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Using the degree of operating leverage,the estimated percent increase in net operating income as the result of a 10% increase in sales is closest to:

Huitron Inc.expects its sales in September to be $143,000.The company's contribution margin ratio is 65% and its fixed monthly expenses are $62,000. Required: Estimate the company's net operating income for September,assuming that the fixed monthly expenses do not change.Show your work!

Goodman Corporation has sales of 3,000 units at $80 per unit.Variable costs are 35% of the sales price.If total fixed costs are $66,000,the degree of operating leverage is:

Incremental analysis is an analytical approach that focuses only on those revenues and costs that will not change as a result of a decision.

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

Stauffer Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The variable expense ratio is closest to:

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

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

Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product. -If the company sells 9,700 units,its net operating income should be closest to:

Knezevich Corporation makes a product that sells for $230 per unit.The product's current sales are 36,900 units and its break-even sales are 32,103 units. Required: Compute the margin of safety in both dollars and as a percentage of sales.

Singapore Candy Cane Corporation is a single product firm with the following cost structure for next year: What is the company's break-even point next year in sales dollars?