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

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. The margin of safety as a percentage of sales is closest to:

On a cost-volume-profit graph, the revenue line will be shown below the total expense line for any activity level above the break-even point.

Solen Corporation's break-even-point in sales is $900,000, and its variable expenses are 75% of sales. If the company lost $32,000 last year, sales must have amounted to:

Incremental analysis is generally the most complicated and least direct approach to decision making.

Data concerning Cutshall Enterprises Corporation's single product appear below: The unit sales to attain the company's monthly target profit of $16,000 is closest to:

Wrobbel Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $307,000 per month. The company is currently selling 6,000 units per month. Required: Management is considering using a new component that would increase the unit variable cost by $2. Since the new component would improve 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 if fixed expenses are unaffected? Show your work!

Stoppkotte Corporation has provided its contribution format income statement for April. If the company's sales increase by 10%, its net operating income should increase by about:

Data concerning Ulwelling Corporation's single product appear below: Fixed expenses are $753,000 per month. The company is currently selling 8,000 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 $11 per unit. In exchange, the sales staff would accept an overall decrease in their salaries of $73,000 per month. 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? Show your work!

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:

One assumption in CVP analysis is that the number of units produced and sold does not change.

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?

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

Gauani Corporation produces and sells a single product. Data concerning that product appear below: Required: a. Assume the company's monthly target profit is $21,600. Determine the unit sales to attain that target profit. Show your work! b. Assume the company's monthly target profit is $54,000. Determine the dollar sales to attain that target profit. 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. Management is considering using a new component that would increase the unit variable cost by $3. 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?

Lasseter Corporation has provided its contribution format income statement for August. The company produces and sells a single product. If the company sells 3,900 units, its net operating income should be closest to:

The following monthly data are available for the Wyatt Corporation and its only product: The margin of safety for the company during May was:

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:

Buentello Corporation produces and sells a single product. The company's contribution format income statement for January appears below: Required: Redo the company's contribution format income statement assuming that the company sells 1,600 units.

Upchurch Corporation produces and sells a single product. Data concerning that product appear below: Assume the company's target profit is $14,000. The dollar sales to attain that target profit is closest to:

A company that makes organic fertilizer has supplied the following data: The company's degree of operating leverage is closest to: