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Exam 4: Cost-Volume-Profit Relationships

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Question 1

Multiple Choice

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The following monthly data are available for the Eager Company and its only product: The margin of safety for the company for March was:

A) $315,000
B) $225,000
C) $135,000
D) $495,000

E) B) and C)
F) B) and D)

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Question 2

Multiple Choice

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Mounts Corporation produces and sells two products.In the most recent month,Product I05L had sales of $32,000 and variable expenses of $10,880.Product P42T had sales of $45,000 and variable expenses of $18,380.And the fixed expenses of the entire company were $46,070.The break-even point for the entire company is closest to:

A) $30,930
B) $75,330
C) $74,306
D) $46,070

E) C) and D)
F) All of the above

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C

Question 3

Multiple Choice

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

A company has provided the following data: If the sales volume decreases by 25%,the variable cost per unit increases by 15%,and all other factors remain the same,net operating income will:

The following data pertain to Epsom Corporation's operations: -The break-even level in sales dollars is:

Mancuso Corporation has provided its contribution format income statement for January.The company produces and sells a single product. If the company sells 3,100 units,its total contribution margin should be closest to:

Paxton Corp has provided the following data concerning its operations last month:Paxton Corp is a retailing organization. -The break-even sales in dollars is (round to the nearest dollar) :

Data concerning Hewell Enterprises Corporation's single product appear below: The unit sales to attain the company's monthly target profit of $14,000 is closest to:

Scheidel Enterprises, Inc. produces and sells a single product whose selling price is $190.00 per unit and whose variable expense is $81.70 per unit. The company's monthly fixed expense is $682,290. -Assume the company's monthly target profit is $21,000.The unit sales to attain that target profit are closest to:

A product sells for $20 per unit and has a contribution margin ratio of 40 percent.Fixed expenses total $240,000 annually.How many units of the product must be sold to yield a profit of $60,000?

If two companies produce the same product and have the same total sales and same total expenses,operating leverage will be lower in the company with a higher proportion of fixed expenses in its cost structure.

The February contribution format income statement of Caines Corporation appears below: -If the company's sales increase by 18%,its net operating income should increase by about:

Mark Corporation produces two models of calculators. The Business model sells for $60, and the Math model sells for $40. The variable expenses are given below: The fixed expenses are $75,000 per month. The expected monthly sales of each model are: Business, 1,000 units; Math, 500 units. -The break-even point in unit sales for the expected sales mix is closest to:

The following information relates to Clyde Corporation which produced and sold 50,000 units last month. There were no beginning or ending inventories.Production and sales next month are expected to be 40,000 units.The company's unit contribution margin next month should be:

Data concerning Celenza Corporation's single product appear below: -Assume the company's monthly target profit is $18,000.The dollar sales to attain that target profit are closest to:

Rider Company sells a single product.The product has a selling price of $40 per unit and variable expenses of $15 per unit.The company's fixed expenses total $30,000 per year.The company's break-even point in terms of total dollar sales is:

Dimitrov Corporation,a company that produces and sells a single product,has provided its contribution format income statement for July. If the company sells 6,900 units,its net operating income should be closest to:

On a CVP graph for a profitable company,the total expense line will be steeper than the line representing fixed costs.

A tile manufacturer has supplied the following data: -The company's contribution margin ratio is closest to:

Mitzel Corporation has provided its contribution format income statement for May. 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 an 18% increase in sales.