Question 1

Data concerning Wythe Corporation's single product appear below:  Fixed expenses are $106,000 per month. The company is currently selling 2,000 units per month. The marketing manager would like to cut the selling price by $15 and increase the advertising budget by $5,000 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?

Accepted Answer

A) increase of $31,000 
B) decrease of $31,000 
C) increase of $103,000 
D) increase of $1,000

Question 2

Alcina Corporation produces and sells a single product whose contribution margin ratio is 80%. The company's monthly fixed expense is $576,000 and the company's monthly target profit is $43,200.
Required:
Determine the dollar sales to attain the company's target profit. Show your work!

Accepted Answer

The answer of Alcina Corporation produces and sells a single...

Question 3

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.

Accepted Answer

The answer of Koelsch Corporation's only product sells for $170...

Question 4

Data concerning Sumter Corporation's single product appear below:  Fixed expenses are $1,024,000 per month. The company is currently selling 8,000 units per month.
Required:
Management is considering using a new component that would increase the unit variable cost by $6. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 300 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!

Accepted Answer

The answer of Data concerning Sumter Corporation's single product appear...

Question 5

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!

Accepted Answer

The answer of Data concerning Phung Corporation's single product appear...

Question 6

A tile 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:

Accepted Answer

A) $6,600 
B) $184,200 
C) $134,422 
D) $138,600

Question 7

At the break-even point, the total contribution margin and fixed expenses are equal.

Accepted Answer

A) True 
 B)False

Question 8

Spartan Systems reported total sales of $300,000, at a price of $20 and per unit variable expenses of $12, for the sales of their single product.  What is the amount of contribution margin if sales volume increases by 30%?

Accepted Answer

A) $19,500 
B) $15,000 
C) $156,000 
D) $120,000

Question 9

Chibu Corporation is a single product firm with the following cost formula for all of its costs for next year, where X is the number of units sold and Y is total cost: Y = $225,000 + $30X
Chibu sells its product for $120 per unit. What would Chibu's total sales dollars have to be next year in order to generate $270,000 of net operating income?

Accepted Answer

A) $618,750 
B) $660,000 
C) $1,080,000 
D) $1,980,000

Question 10

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?

Accepted Answer

A) decrease of $1,000 
B) decrease of $55,000 
C) increase of $26,200 
D) increase of $191,000

Question 11

Brees Inc., a company that produces and sells a single product, has provided its contribution format income statement for April.  If the company sells 5,800 units, its total contribution margin should be closest to:

Accepted Answer

A) $55,800 
B) $52,200 
C) $6,642 
D) $47,000

Question 12

Renfrew Corporation has provided the following data concerning its only product:  The margin of safety as a percentage of sales is closest to:

Accepted Answer

A) 29% 
B) 59% 
C) 71% 
D) 41%

Question 13

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

Accepted Answer

A) 1,413 units 
B) 2,920 units 
C) 5,436 units 
D) 1,910 units

Question 14

Arthur Corporation has a margin of safety percentage of 25% based on its actual sales. The break-even point is $300,000 and the variable expenses are 45% of sales. Given this information, the actual profit is:

Accepted Answer

A) $75,000 
B) $55,000 
C) $15,000 
D) $41,250

Question 15

Data concerning Bunck Corporation's single product appear below:  Fixed expenses are $202,000 per month. The company is currently selling 2,000 units per month. Management is considering using a new component that would increase the unit variable cost by $18. 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?

Accepted Answer

A) decrease of $47,200 
B) decrease of $11,200 
C) increase of $47,200 
D) increase of $11,200

Question 16

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

Accepted Answer

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

Question 17

If Q equals the level of output, P is the selling price per unit, V is the variable expense per unit, and F is the fixed expense, then the degree of operating leverage is equal to:

Accepted Answer

A) Q/(P-V). 
B) F/(P-V). 
C) F/[(P-V)/P]. 
D) [(P-V)Q]/[(P-V)Q - F].

Question 18

At a break-even point of 800 units sold, White Corporation's variable expenses are $8,000 and its fixed expenses are $4,000. What will the Corporation's net operating income be at a volume of 801 units?

Accepted Answer

A) $15 
B) $10 
C) $5 
D) $20

Question 19

Torbert, Inc., produces and sells a single product. The product sells for $190.00 per unit and its variable expense is $72.20 per unit. The company's monthly fixed expense is $353,400.
Required:
Determine the monthly break-even in unit sales. Show your work!

Accepted Answer

The answer of Torbert, Inc., produces and sells a single...

Question 20

Larita Corporation produces and sells a single product. Data concerning that product appear below:  Fixed expenses are $243,000 per month. The company is currently selling 2,000 units per month.
Required:
The marketing manager believes that a $28,000 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? Show your work!

Accepted Answer

The answer of Larita Corporation produces and sells a single...

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

Alcina Corporation produces and sells a single product whose contribution margin ratio is 80%. The company's monthly fixed expense is $576,000 and the company's monthly target profit is $43,200. Required: Determine the dollar sales to attain the company's 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.

A tile 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:

At the break-even point, the total contribution margin and fixed expenses are equal.

Spartan Systems reported total sales of $300,000, at a price of $20 and per unit variable expenses of $12, for the sales of their single product. What is the amount of contribution margin if sales volume increases by 30%?

Brees Inc., a company that produces and sells a single product, has provided its contribution format income statement for April. If the company sells 5,800 units, its total contribution margin should be closest to:

Renfrew Corporation has provided the following data concerning its only product: The margin of safety as a percentage of sales is closest to:

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

Arthur Corporation has a margin of safety percentage of 25% based on its actual sales. The break-even point is $300,000 and the variable expenses are 45% of sales. Given this information, the actual profit is:

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

If Q equals the level of output, P is the selling price per unit, V is the variable expense per unit, and F is the fixed expense, then the degree of operating leverage is equal to:

At a break-even point of 800 units sold, White Corporation's variable expenses are $8,000 and its fixed expenses are $4,000. What will the Corporation's net operating income be at a volume of 801 units?

Torbert, Inc., produces and sells a single product. The product sells for $190.00 per unit and its variable expense is $72.20 per unit. The company's monthly fixed expense is $353,400. Required: Determine the monthly break-even in unit sales. Show your work!