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Exam 4: Cost-Volume-Profit Relationships

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Question 21

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Olis Corporation sells a product for $130 per unit.The product's current sales are 28,900 units and its break-even sales are 25,721 units.What is the margin of safety in dollars?

A) $413,270
B) $3,343,730
C) $2,504,667
D) $3,757,000

E) B) and D)
F) None of the above

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Question 22

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Puchalla Corporation sells a product for $230 per unit.The product's current sales are 13,400 units and its break-even sales are 10,720 units.The margin of safety as a percentage of sales is closest to:

A) 20%
B) 25%
C) 80%
D) 75%

E) A) and B)
F) A) and C)

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Question 23

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Hunter Corporation sells a product for $180 per unit. The product's current sales are 34,900 units and its break-even sales are 25,128 units. -What is the margin of safety in dollars?

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

Patterson Company's variable expenses are 55% of sales.At a $400,000 sales level,the degree of operating leverage is 5.If sales increase by $30,000,the new degree of operating leverage will be (rounded) :

Paxton Corp has provided the following data concerning its operations last month:Paxton Corp is a retailing organization. -The operating leverage is:

Moncrief Inc.produces and sells a single product.The selling price of the product is $170.00 per unit and its variable cost is $62.90 per unit.The fixed expense is $300,951 per month.The break-even in monthly unit sales is closest to:

The selling price of Bayard Corporation's only product is $230.00 per unit and its variable expense is $80.50 per unit.The company's monthly fixed expense is $792,350. Required: Assume the company's monthly target profit is $29,900.Determine the unit sales to attain that target profit.Show your work!

Knoke Corporation's contribution margin ratio is 29% and its fixed monthly expenses are $17,000.If the company's sales for a month are $98,000,what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change.

Street Company's fixed expenses total $150,000,its variable expense ratio is 60% and its variable expenses are $4.50 per unit.Based on this information,the break-even point in units is:

Data concerning Lancaster Corporation's single product appear below: Fixed expenses are $105,000 per month.The company is currently selling 1,000 units per month.Management is considering using a new component that would increase the unit variable cost by $44.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?

Victorin Corporation has provided the following data concerning its only product: The margin of safety as a percentage of sales is closest to:

Pool Company's variable expenses are 36% of sales.Pool is contemplating an advertising campaign that will cost $20,000.If sales increase by $80,000,the company's net operating income should increase by:

If two companies have the same total sales and total expenses and make the same product,the volatility of net operating income with changes in sales will tend to be greater in the company with a higher proportion of fixed expenses in its cost structure.

With regard to the CVP graph,which of the following statements is not correct?

Parkins Company produces and sells a single product.The company's income statement for the most recent month is given below: There are no beginning or ending inventories. Required: a.Compute the company's monthly break-even point in units of product. b.What would the company's monthly net operating income be if sales increased by 25% and there is no change in total fixed expenses? c.What dollar sales must the company achieve in order to earn a net operating income of $50,000 per month? d.The company has decided to automate a portion of its operations.The change will reduce direct labor costs per unit by 40 percent,but it will double the costs for fixed factory overhead.Compute the new break-even point in units.

Frymire Corporation produces and sells a single product. Data concerning that product appear below: -The unit sales to attain that the target profit of $36,000 is closest to:

Gardner Furniture Company produces two kinds of chairs: an oak model and a chestnut wood model. The oak model sells for $60 and the chestnut wood model sells for $100. The variable expenses are as follows: Expected sales in units next year are: 5,000 oak chairs and 1,000 chestnut chairs. Fixed expenses are budgeted at $135,000 per year. -The yearly break-even point in total sales for the expected sales mix is:

Sensabaugh Inc. ,a company that produces and sells a single product,has provided its contribution format income statement for January. If the company sells 1,600 units,its total contribution margin should be closest to:

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. -The break-even point for the entire company is closest to: