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Exam 6: Cost-Volume-Profit Relationships

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Question 31

Multiple Choice

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Tribley Inc.has an operating leverage of 8.0.If the company's sales increase by 19%,its net operating income should increase by about:

A) 152.0%
B) 19.0%
C) 8.0%
D) 42.1%

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Question 32

Multiple Choice

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

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

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Question 33

Multiple Choice

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Sales in North Corporation increased from $60,000 per year to $63,000 per year while net operating income increased from $10,000 to $12,000.Given this data,the company's degree of operating leverage must have been:

The records of the Dodge Corporation show the following results for the most recent year: Given these data,the unit contribution margin was:

Lopp Corporation produces and sells a single product.Data concerning that product appear below: Required: Assume the company's monthly target profit is $38,280.Determine the unit sales to attain that target profit.Show your work!

Koelsch Corporation's only product sells for $170 per unit.Its current sales are 43,600 units and its break-even sales are 39,240 units. Required: Compute the margin of safety in both dollars and as a percentage of sales.

All other things the same,if the fixed expenses increase in a company then one would expect the margin of safety to increase.

Morganti Corporation sells a product for $140 per unit.The product's current sales are 40,700 units and its break-even sales are 31,339 units. What is the margin of safety in dollars?

Frank Corporation manufacturers a single product that has a selling price of $20.00 per unit.Fixed expenses total $45,000 per year,and the company must sell 5,000 units to break even.If the company has a target profit of $13,500,sales in units must be:

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:

Bohlen Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $716,000 per month.The company is currently selling 6,000 units per month.Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Bohlen 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 $8.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?

All other things the same,an increase in total fixed expenses will increase the break-even point.

All other things the same,an increase in variable expense per unit will reduce the break-even point.

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. The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $8 per unit.In exchange,the sales staff would accept a decrease in their salaries of $27,000 per month.(This is the company's savings for the entire sales staff. ) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 100 units.What should be the overall effect on the company's monthly net operating income of this change?

Shauer,Inc. ,produces and sells a single product whose selling price is $150.00 per unit and whose variable expense is $33.00 per unit.The company's fixed expense is $436,410 per month. Required: Determine the monthly break-even in either unit or total dollar sales.Show your work!

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?

Data concerning Phung Corporation's single product appear below: Fixed expenses are $991,000 per month.The company is currently selling 8,000 units per month. Required: The marketing manager believes that a $23,000 increase in the monthly advertising budget would result in a 190 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

Mcallister Corporation has provided the following data concerning its only product: What is the margin of safety in dollars?

Data concerning Kurek Corporation's single product appear below: Fixed expenses are $190,000 per month.The company is currently selling 4,000 units per month. Required: The marketing manager would like to cut the selling price by $12 and increase the advertising budget by $11,100 per month.The marketing manager predicts that these two changes would increase monthly sales by 1,500 units.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

Gilpatric Corporation produces and sells two products.In the most recent month,Product Q71M had sales of $28,000 and variable expenses of $7,840.Product V04P had sales of $49,000 and variable expenses of $27,580.The fixed expenses of the entire company were $34,630. If the sales mix were to shift toward Product Q71M with total sales remaining constant,the overall break-even point for the entire company: