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Exam 4: Cost-Volume-Profit Relationships

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Question 201

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A company with a degree of operating leverage of 4 would expect income to increase by 200% if sales increased from $100,000 to $150,000. Increase in Sales is 50% so income increases 50%*4

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Question 202

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If Total sales next month are $330,000 and Fletchers sales mix remains unchanged,the total sales for product C will be closest to:

A) $100,000.
B) $110,000.
C) $82,500.
D) $137,500.

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Question 203

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A total of 30,000 units were sold last year.The contribution margin per unit was $2,and total fixed expenses were $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 operating income as was earned last year?

For a given level of sales,a low contribution margin ratio will produce less operating income than a high contribution margin ratio.

Which of the following is defined as the difference between total sales in dollars and total variable expenses?

At a break-even point of 800 units sold,White Company's variable expenses are $8,000 and its fixed expenses are $4,000.What will the company's operating income be at a volume of 801 units?

What is the variable expense per unit?

If Dorian Company desires a monthly operating income equal to 10% of sales,what will its monthly sales have to be?

A company has provided the following data: If the dollar contribution margin per unit is increased by 10%,total fixed cost is decreased by 20%,and all other factors remain the same,what will the outcome be for operating income?

What is the company's contribution margin ratio?

If the expected monthly sales in units were divided equally between the two models (900 Standard and 900 Deluxe) ,where would the break-even level of sales be as compared to the expected sales mix?

The margin of safety percentage is equal to the margin of safety in dollars divided by total sales in dollars.

What is the company's margin of safety in dollars?

The following is Alsatia Corporation's contribution format income statement for last month: The company has no beginning or ending inventories and produced and sold 10,000 units during the month. Required: a)What is the company's contribution margin ratio? b)What is the company's break-even in units? c)If sales increase by 100 units,by how much should operating income increase? d)How many units would the company have to sell to attain target operating income of $225,000? e)What is the company's margin of safety in dollars? f)What is the company's degree of operating leverage?

Which of the following is defined as the amount by which a company's sales can decline before operating losses are incurred?

Marston Enterprises sells three chemicals: petrol,septine,and tridol.Petrol's unit contribution margin is higher than septine's,which is higher than tridol's.Which one of the following events is most likely to increase the company's overall break-even point?

If the expected monthly sales in units were divided equally between the two models (900 Standard and 900 Deluxe) ,where would the break-even level of sales be as compared to the expected sales mix?

The following data pertain to last month's operations: What is the break-even point in dollars?

The break-even point in units can be obtained by dividing total fixed expenses by the contribution margin ratio.

The following is last month's contribution format income statement: What is the company's break-even sales in units?