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Exam 5: Cost-Volume-Profit Relationships

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Question 71

Multiple Choice

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Data concerning Strite Corporation's single product appear below: -Assume the company's target profit is $17,000.The unit sales to attain that target profit is closest to:

A) 5,804 units
B) 2,921 units
C) 4,057 units
D) 10,433 units

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Question 72

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Steffen Corporation has three products with the following characteristics: The overall contribution margin ratio for the company as a whole is closest to:

A) 35.3%
B) 75.0%
C) 25.0%
D) 28.5%

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Question 73

Multiple Choice

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Which of the following would not affect the break-even point?

Highjinks, Inc., has provided the following budgeted data: -How many units would the company have to sell in order to have a net operating income equal to 5% of total sales dollars?

Haslem Inc.has provided the following data concerning its only product: Required: Compute the margin of safety in both dollars and as a percentage of sales.

The degree of operating leverage is computed by dividing sales by the contribution margin.

Hawver Corporation produces and sells a single product.Data concerning that product appear below: Required: Assume the company's monthly target profit is $19,800.Determine the unit sales to attain that target profit.Show your work!

Houpe Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $490,000 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 Houpe Corporation.Refer to the original data when answering this question. The marketing manager would like to cut the selling price by $7 and increase the advertising budget by $28,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 500 units.What should be the overall effect on the company's monthly net operating income of this change?

Hamiel Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $301,000 per month.The company is currently selling 5,000 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 $16 per unit.In exchange,the sales staff would accept an overall decrease in their salaries of $68,000 per month.The marketing manager predicts that introducing this sales incentive would increase monthly sales by 200 units.What should be the overall effect on the company's monthly net operating income of this change? Show your work!

Maruca Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. -The margin of safety in dollars is closest to:

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

Kuzio Corporation produces and sells a single product.Data concerning that product appear below: The company is currently selling 6,000 units per month.Fixed expenses are $263,000 per month.The marketing manager believes that a $5,000 increase in the monthly advertising budget would result in a 140 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

A company that makes organic fertilizer has supplied the following data: -The company's margin of safety in units is closest to:

Highjinks, Inc., has provided the following budgeted data: -What is the company's margin of safety as a percentage of sales?

Thornbrough Corporation produces and sells a single product with the following characteristics: The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month. Consider each of the following questions independently. -This question is to be considered independently of all other questions relating to Thornbrough 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 $11 per unit.In exchange,the sales staff would accept a decrease in their salaries of $65,000 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 300 units.What should be the overall effect on the company's monthly net operating income of this change?

The following data are available for the Phelps Corporation for a recent month: The break-even sales for the month for the company is closest to:

Stockmaster Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The margin of safety in dollars is closest to:

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

Rushenberg Corporation's operating leverage is 10.8.If the company's sales increase by 14%,its net operating income should increase by about:

Souza Inc, which produces and sells a single product, has provided its contribution format income statement for October. -If the company sells 3,500 units,its net operating income should be closest to: