Question 1

Mark Company currently sells a video recorder with a selling price of $300 per unit.The variable expense per unit is $175 and fixed expenses are $100,000.If the company reduces variable expenses by $20 per unit and increases the fixed expenses by $10,000,the break-even point will increase.

Accepted Answer

A) True 
 B)False

Question 2

Budget data for the Bidwell Company are as follows:
-If fixed expenses increased $31,500,the break-even sales in units would be:

Accepted Answer

A) 34,500 units 
B) 80,500 units 
C) 69,000 units 
D) 94,500 units

Question 3

Starwalt Corporation produces and sells a single product. The company has provided its contribution format income statement for March. 
-If the company sells 7,300 units,its net operating income should be closest to:

Accepted Answer

A) $46,700 
B) $75,100 
C) $59,100 
D) $71,199

Question 4

Southwest Industries produces a sports glove that sells for $15 per pair. Variable expenses are $8 per pair and fixed expenses are $35,000 annually.
-The break-even point for Southwest Industries in pairs of gloves is:

Accepted Answer

A) 8,000 pairs 
B) 5,000 pairs 
C) 4,375 pairs 
D) 2.333 pairs

Question 5

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.
-If the expected monthly sales in units were divided equally between the two models (900 Standard and 900 Deluxe),the break-even level of sales would be:

Accepted Answer

A) lower than with the expected sales mix. 
B) higher than with the expected sales mix. 
C) the same as with the expected sales mix. 
D) cannot be determined with the available data.

Question 6

Schlender Corporation produces and sells two products. In the most recent month, Product L40O had sales of $22,000 and variable expenses of $8,580. Product Y27L had sales of $49,000 and variable expenses of $17,690. The fixed expenses of the entire company were $43,950.
-If the sales mix were to shift toward Product L40O with total dollar sales remaining constant,the overall break-even point for the entire company:

Accepted Answer

A) would not change. 
B) would increase. 
C) would decrease. 
D) could increase or decrease.

Question 7

Frymire Corporation produces and sells a single product. Data concerning that product appear below: 
-Assume the company's monthly target profit is $46,000.The dollar sales to attain that target profit is closest to:

Accepted Answer

A) $3,228,703 
B) $1,961,477 
C) $1,590,257 
D) $1,065,472

Question 8

The break-even point in unit sales increases when variable expenses:

Accepted Answer

A) increase and the selling price remains unchanged. 
B) decrease and the selling price remains unchanged. 
C) decrease and the selling price increases. 
D) remain unchanged and the selling price increases.

Question 9

The total volume in sales dollars that would be required to attain a given target profit is determined by dividing the sum of the fixed expenses and the target profit by the contribution margin ratio.

Accepted Answer

A) True 
 B)False

Question 10

Guagliano Corporation produces and sells a single product whose selling price is $110.00 per unit and whose variable expense is $29.70 per unit.The company's monthly fixed expense is $345,290.
Required:
a.Assume the company's monthly target profit is $16,060.Determine the unit sales to attain that target profit.Show your work!
b.Assume the company's monthly target profit is $40,150.Determine the dollar sales to attain that target profit.Show your work!

Accepted Answer

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

Question 11

Pedulla Inc, which produces and sells a single product, has provided its contribution format income statement for February. 
-If the company sells 2,900 units,its net operating income should be closest to:

Accepted Answer

A) $35,581 
B) $44,800 
C) $31,900 
D) $58,000

Question 12

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

Accepted Answer

A) $646,300 
B) $1,794,920 
C) $1,009,700 
D) $1,150,230

Question 13

A shift in the sales mix from products with a low contribution margin ratio toward products with a high contribution margin ratio will lower the break-even point in the company as a whole.

Accepted Answer

A) True 
 B)False

Question 14

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 would like to cut the selling price by $6 and increase the advertising budget by $46,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 800 units.What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

A) Increase of $13,200 
B) Increase of $29,200 
C) Decrease of $13,200 
D) Decrease of $40,800

Question 15

A total of 30,000 units were sold last year.The contribution margin per unit was $2,and fixed expenses totaled $20,000 for the year.This year fixed expenses are expected to increase to $26,000,but the contribution margin per unit will remain unchanged at $2.How many units must be sold this year to earn the same profit as was earned last year?

Accepted Answer

A) 23,000 units 
B) 43,000 units 
C) 30,000 units 
D) 13,000 units

Question 16

Torri Inc.produces and sells two products.During the most recent month,Product C34M's sales were $25,000 and its variable expenses were $5,750.Product Y03Z's sales were $40,000 and its variable expenses were $9,850.The company's fixed expenses were $48,310. 
Required:
a.Determine the overall break-even point for the company.Show your work!
b.If the sales mix shifts toward Product C34M with no change in total sales,what will happen to the break-even point for the company? Explain.

Accepted Answer

The answer of Torri Inc.produces and sells two products.During the...

Question 17

Evergreen Corp. has provided the following data: 
-The margin of safety percentage is:

Accepted Answer

A) 45.0% 
B) 71.4% 
C) 55.0% 
D) 25.0%

Question 18

A cement manufacturer has supplied the following data: 
-If the company increases its unit sales volume by 3% without increasing its fixed expenses,then total net operating income should be closest to:

Accepted Answer

A) $84,460 
B) $99,940 
C) $2,460 
D) $83,316

Question 19

If fixed expenses increase by $10,000 per year,then the level of sales needed to break even will also increase by $10,000.

Accepted Answer

A) True 
 B)False

Question 20

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.
-What is the company's break-even sales in dollars?

Accepted Answer

A) $0 
B) $640,000 
C) $700,000 
D) $400,000

Exam 4: Cost-Volume-Profit Relationships

Mark Company currently sells a video recorder with a selling price of $300 per unit.The variable expense per unit is $175 and fixed expenses are $100,000.If the company reduces variable expenses by $20 per unit and increases the fixed expenses by $10,000,the break-even point will increase.

Budget data for the Bidwell Company are as follows: -If fixed expenses increased $31,500,the break-even sales in units would be:

Starwalt Corporation produces and sells a single product. The company has provided its contribution format income statement for March. -If the company sells 7,300 units,its net operating income should be closest to:

Southwest Industries produces a sports glove that sells for $15 per pair. Variable expenses are $8 per pair and fixed expenses are $35,000 annually. -The break-even point for Southwest Industries in pairs of gloves is:

Frymire Corporation produces and sells a single product. Data concerning that product appear below: -Assume the company's monthly target profit is $46,000.The dollar sales to attain that target profit is closest to:

The break-even point in unit sales increases when variable expenses:

The total volume in sales dollars that would be required to attain a given target profit is determined by dividing the sum of the fixed expenses and the target profit by the contribution margin ratio.

Pedulla Inc, which produces and sells a single product, has provided its contribution format income statement for February. -If the company sells 2,900 units,its net operating income should be closest to:

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

A shift in the sales mix from products with a low contribution margin ratio toward products with a high contribution margin ratio will lower the break-even point in the company as a whole.

Evergreen Corp. has provided the following data: -The margin of safety percentage is:

A cement manufacturer has supplied the following data: -If the company increases its unit sales volume by 3% without increasing its fixed expenses,then total net operating income should be closest to:

If fixed expenses increase by $10,000 per year,then the level of sales needed to break even will also increase by $10,000.

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. -What is the company's break-even sales in dollars?