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Exam 4: Cost-Volume-Profit Relationships

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Question 81

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The April contribution format income statement of Iannacone Corporation appears below: -If the company's sales increase by 1%,its net operating income should increase by about:

A) 9%
B) 1%
C) 4%
D) 11%

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Question 82

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Scott Company's variable expenses are 72% of sales.The company's break-even point in dollar sales is $2,450,000.If sales are $60,000 below the break-even point,the company would report a:

A) $43,200 loss
B) $60,000 loss
C) $16,800 loss
D) cannot be determined from the data given.

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Question 83

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Ringstaff Corporation produces and sells a single product.Data concerning that product appear below: The company is currently selling 7,000 units per month.Fixed expenses are $615,000 per month.The marketing manager believes that a $21,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

A manufacturer of tiling grout has supplied the following data: -The company's break-even in unit sales is closest to:

Rosner Corporation sells a product for $150 per unit.The product's current sales are 32,500 units and its break-even sales are 24,050 units. -The margin of safety as a percentage of sales is closest to:

Hurst Co.manufacturers and sells a single product.Price and cost data regarding this product are as follows: -How many units need to be sold to earn an annual net operating income equal to 10% of sales?

The break-even point in dollar sales for Rice Company is $360,000 and the company's contribution margin ratio is 30%.If Rice Company desires a profit of $84,000,sales would have to total

A company increased the selling price for its product from $5 to $6 per unit when total fixed expenses increased from $100,000 to $200,000 and variable expense per unit remained unchanged.How would these changes affect the break-even point?

Finestra Corporation produces a single product that it currently sells for $10.Fixed expenses are $120,000 for the year and variable expenses are $6 per unit.In addition,Finestra's salespersons are paid a commission of 10% of their sales. -If Finestra spends an additional $10,000 on advertising,increases its selling price to $12 per unit,and sells 60,000 units,its net operating income would be:

Magers Corporation produces and sells a single product.Data concerning that product appear below: Required: Determine the monthly break-even in either unit or total dollar sales.Show your work!

Yundt Corporation produces and sells a single product.Data concerning that product appear below: Required: Determine the monthly break-even in total dollar sales.Show your work!

Doubleday Corporation produces and sells a single product.The company has provided its contribution format income statement for August. -If the company sells 3,000 units,its total contribution margin should be closest to:

Data concerning Damberger Corporation's single product appear below: The company is currently selling 5,000 units per month.Fixed expenses are $243,000 per month.The marketing manager believes that an $11,000 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

Weise Corporation produces and sells two products.Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $38,200. -The break-even point for the entire company is closest to:

If sales increase from $80,000 per year to $120,000 per year,and if the operating leverage is 5,then net operating income should increase by:

Last year,variable expenses were 60% of total sales and fixed expenses were 10% of total sales.If the company increases its selling prices by 10%,but if fixed expenses,variable costs per unit,and unit sales remain unchanged,the effect of the increase in selling price on the company's total contribution margin would be:

The degree of operating leverage is greatest at sales levels near the break-even point and decreases as sales rise.

In the most recent month,Flamino Corporation's total contribution margin was $83,700 and its net operating income $21,200. Required: a.Compute the degree of operating leverage to two decimal places. b.Using the degree of operating leverage,estimate the percentage change in net operating income that should result from a 17% increase in sales.

Sullens Inc,which produces and sells a single product,has provided its contribution format income statement for July. -If the company sells 8,600 units,its total contribution margin should be closest to:

Moloney Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $898,000 per month.The company is currently selling 9,000 units per month.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 a decrease in their salaries of $117,000 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?