Question 1

In two companies making the same product and with the same total sales and total expenses, the contribution margin ratio will be higher in the company with a higher proportion of fixed expenses in its cost structure.

Accepted Answer

A) True 
 B)False

Question 2

Closser Corporation produces and sells two products. In the most recent month, Product M50S had sales of $39,000 and variable expenses of $12,870. Product H50G had sales of $12,000 and variable expenses of $4,980. The fixed expenses of the entire company were $33,050. The break-even point for the entire company is closest to:

Accepted Answer

A) $50,846 
B) $50,900 
C) $17,950 
D) $33,050

Question 3

Assume the company's target profit is $8,000. The dollar sales to attain that target profit is closest to:

Accepted Answer

A) $288,800 
B) $497,378 
C) $481,333 
D) $722,000

Question 4

This question is to be considered independently of all other questions relating to Boenisch Corporation. Refer to the original data when answering this question.

-The marketing manager would like to cut the selling price by $12 and increase the advertising budget by $30,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,800 units. What should be the overall effect on the company's monthly net operating income of this change?

Accepted Answer

A) decrease of $25,200 
B) increase of $254,400 
C) increase of $70,800 
D) decrease of $70,800

Question 5

Cleckley Corporation's operating leverage is 5.9. If the company's sales increase by 19%, its net operating income should increase by about:

Accepted Answer

A) 5.9% 
B) 31.1% 
C) 19.0% 
D) 112.1%

Question 6

Brees Inc., a company that produces and sells a single product, has provided its contribution format income statement for April.  If the company sells 5,800 units, its total contribution margin should be closest to:

Accepted Answer

A) $55,800 
B) $52,200 
C) $6,642 
D) $47,000

Question 7

Carlton Corporation sells a single product at a selling price of $40 per unit. Variable expenses are $22 per unit and fixed expenses are $82,800. Carlton's break-even point is:

Accepted Answer

A) 4,600 units 
B) 3,764 units 
C) 5,000 units 
D) 2,070 units

Question 8

Minist Corporation sells a single product for $15 per unit. Last year, the company's sales revenue was $225,000 and its net operating income was $18,000. If fixed expenses totaled $72,000 for the year, the break-even point in unit sales was:

Accepted Answer

A) 15,000 
B) 9,900 
C) 14,100 
D) 12,000

Question 9

The unit sales volume necessary to reach a target profit is determined by dividing the sum of the fixed expenses and the target profit by the contribution margin per unit.

Accepted Answer

A) True 
 B)False

Question 10

If the company sells 3,900 units, its net operating income should be closest to:

Accepted Answer

A) $15,800 
B) $21,600 
C) $19,000 
D) $16,654

Question 11

The break-even in monthly dollar sales is closest to:

Accepted Answer

A) $310,860 
B) $1,195,920 
C) $420,200 
D) $642,400

Question 12

The break-even in monthly dollar sales is closest to:

Accepted Answer

A) $281,580 
B) $484,943 
C) $703,950 
D) $469,300

Question 13

The management of Pacubas Corporation expects sales in July to be $121,000. The company's contribution margin ratio is 64% and its fixed monthly expenses are $40,000.
Required:
Estimate the company's net operating income for July, assuming that the fixed monthly expenses do not change. Show your work!

Accepted Answer

The answer of The management of Pacubas Corporation expects sales...

Question 14

Crumbley Inc. produces and sells two products. Data concerning those products for the most recent month appear below:  Fixed expenses for the entire company were $42,760.
Required:
a. Determine the overall break-even point for the company in total sales dollars. Show your work!
b. If the sales mix shifts toward Product W43J with no change in total sales, what will happen to the break-even point for the company? Explain.

Accepted Answer

The answer of Crumbley Inc. produces and sells two products....

Question 15

Assume a company sells a single product. If Q equals the level of output, P is the selling price per unit, V is the variable expense per unit, and F is the fixed expense, then the break-even point in sales dollars is:

Accepted Answer

A) F/(P-V). 
B) F/[Q(P-V)]. 
C) F/[Q(P-V)/P]. 
D) F/[(P-V)/P].

Question 16

The contribution margin ratio of Baginski Corporation's only product is 53%. The company's monthly fixed expense is $617,980 and the company's monthly target profit is $23,000. The dollar sales to attain that target profit is closest to:

Accepted Answer

A) $1,166,000 
B) $1,209,396 
C) $339,719 
D) $327,529

Question 17

Preyer 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) $2,344,795 
B) $492,407 
C) $623,300 
D) $1,153,501

Question 18

Moallankamp Corporation produces and sells a single product. Data concerning that product appear below:  Fixed expenses are $1,131,000 per month. The company is currently selling 7,000 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 $20 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $117,000 per month. The marketing manager predicts that introducing this sales incentive would increase monthly sales by 400 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 Moallankamp Corporation produces and sells a single...

Question 19

If the company's sales increase by 5%, its net operating income should increase by about:

Accepted Answer

A) 34% 
B) 67% 
C) 5% 
D) 7%

Question 20

One assumption in CVP analysis is that the number of units produced and sold does not change.

Accepted Answer

A) True 
 B)False

Exam 10: Cost-Volume-Profit Relationships

In two companies making the same product and with the same total sales and total expenses, the contribution margin ratio will be higher in the company with a higher proportion of fixed expenses in its cost structure.

Assume the company's target profit is $8,000. The dollar sales to attain that target profit is closest to:

Cleckley Corporation's operating leverage is 5.9. If the company's sales increase by 19%, its net operating income should increase by about:

Brees Inc., a company that produces and sells a single product, has provided its contribution format income statement for April. If the company sells 5,800 units, its total contribution margin should be closest to:

Carlton Corporation sells a single product at a selling price of $40 per unit. Variable expenses are $22 per unit and fixed expenses are $82,800. Carlton's break-even point is:

Minist Corporation sells a single product for $15 per unit. Last year, the company's sales revenue was $225,000 and its net operating income was $18,000. If fixed expenses totaled $72,000 for the year, the break-even point in unit sales was:

The unit sales volume necessary to reach a target profit is determined by dividing the sum of the fixed expenses and the target profit by the contribution margin per unit.

If the company sells 3,900 units, its net operating income should be closest to:

The break-even in monthly dollar sales is closest to:

The break-even in monthly dollar sales is closest to:

Assume a company sells a single product. If Q equals the level of output, P is the selling price per unit, V is the variable expense per unit, and F is the fixed expense, then the break-even point in sales dollars is:

The contribution margin ratio of Baginski Corporation's only product is 53%. The company's monthly fixed expense is $617,980 and the company's monthly target profit is $23,000. The dollar sales to attain that target profit is closest to:

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

If the company's sales increase by 5%, its net operating income should increase by about:

One assumption in CVP analysis is that the number of units produced and sold does not change.