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Exam 6: Variable Costing and Segment Reporting: Tools for Management

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Question 1

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Joly Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $511,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $16 and increase the advertising budget by $33,000 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?

A) decrease of $59,800
B) increase of $59,800
C) increase of $130,200
D) decrease of $20,200

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Question 2

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

A) 819
B) 2,214
C) 1,300
D) 1,444

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Question 3

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Callicott Corporation produces a product that sells for $120 per unit. The product's current sales are 25,400 units and its break-even sales are 18,542 units. What is the margin of safety in dollars?

Data concerning Marchman Corporation's single product appear below: The company is currently selling 4,000 units per month. Fixed expenses are $166,000 per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Marchman 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 $2. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 200 units. What should be the overall effect on the company's monthly net operating income of this change?

The contribution margin ratio of Donath Corporation's only product is 65%. The company's monthly fixed expense is $573,300 and the company's monthly target profit is $9,100. Required: Determine the dollar sales to attain the company's target profit. Show your work!

Sanes Corporation produces and sells a single product. Data concerning that product appear below: The unit sales to attain the company's monthly target profit of $19,000 is closest to:

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:

A manufacturer of cedar shingles has supplied the following data: The company's degree of operating leverage is closest to:

All other things the same, a reduction in the variable expense per unit will decrease the break-even point.

Lasseter Corporation has provided its contribution format income statement for August. The company produces and sells a single product. If the company sells 3,800 units, its total contribution margin should be closest to:

Maack Corporation's contribution margin ratio is 16% and its fixed monthly expenses are $44,000. If the company's sales for a month are $299,000, what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change.

Wyly 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 $356,643 per month. The break-even in monthly dollar sales is closest to:

Boenisch Corporation produces and sells a single product with the following characteristics: The company is currently selling 8,000 units per month. Fixed expenses are $406,000 per month. Consider each of the following questions independently. 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 believes that a $10,000 increase in the monthly advertising budget would result in a 170 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Grisham Corporation produces and sells a single product. The company has provided its contribution format income statement for February. If the company sells 5,900 units, its total contribution margin should be closest to:

A cement manufacturer has supplied the following data: If the company increases its unit sales volume by 5% without increasing its fixed expenses, then total net operating income should be closest to:

In December, Mccullum Corporation sold 2,900 units of its only product. Its total sales were $281,300, its total variable expenses were $130,500, and its total fixed expenses were $122,600. Required: a. Construct the company's contribution format income statement for December. b. Redo the company's contribution format income statement assuming that the company sells 3,100 units.

Bowe Corporation's fixed monthly expenses are $21,000 and its contribution margin ratio is 61%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $74,000?

Lepage Corporation has provided its contribution format income statement for January. The company produces and sells a single product. If the company sells 4,700 units, its total contribution margin should be closest to:

Liest Corporation produces and sells a single product whose selling price is $100.00 per unit and whose variable expense is $48.00 per unit. The company's monthly fixed expense is $244,400. Required: a. Assume the company's monthly target profit is $5,200. Determine the unit sales to attain that target profit. Show your work! b. Assume the company's monthly target profit is $26,000. Determine the dollar sales to attain that target profit. Show your work!

The Agate Corporation manufactures and sells two types of bookcases, standard and deluxe. Agate expects the following operating results next year for each type of bookcase: Agate expects to have a total of $57,600 in fixed expenses next year. What is Agate's break-even point next year in sales dollars?