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Exam 6: Cost-Volume-Profit Relationships

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Question 111

Multiple Choice

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Data concerning Bazin Corporation's single product appear below: Fixed expenses are $384,000 per month.The company is currently selling 6,000 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 $9 per unit.In exchange, the sales staff would accept a decrease in their salaries of $46,000 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 500 units.What should be the overall effect on the company's monthly net operating income of this change?

A) increase of $27,500
B) decrease of $64,500
C) increase of $41,500
D) increase of $507,500

E) A) and B)
F) None of the above

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Question 112

Multiple Choice

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Stauffer Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The variable expense ratio is closest to:

A) 60%
B) 40%
C) 67%
D) 33%

E) C) and D)
F) A) and C)

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Question 113

Multiple Choice

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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 cut the selling price by $18 and increase the advertising budget by $53,000 per month.The marketing manager predicts that these two changes would increase monthly sales by 1,000 units.What should be the overall effect on the company's monthly net operating income of this change?

Wenstrom Corporation produces and sells a single product.Data concerning that product appear below: The break-even in monthly dollar sales is closest to:

If the company sells 4,500 units, its total contribution margin should be closest to:

Certosimo Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required: a.If sales increase to 7,040 units, what would be the estimated increase in net operating income? b.If sales decline to 6,900 units, what would be the estimated net operating income?

The degree of operating leverage is closest to:

At the budgeted sales level of 10,000 units, what is the company's degree of operating leverage?

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

Mechem Corporation produces and sells a single product.In April, the company sold 2,100 units.Its total sales were $205,800, its total variable expenses were $107,100, and its total fixed expenses were $82,400. Required: a.Construct the company's contribution format income statement for April. b.Redo the company's contribution format income statement assuming that the company sells 2,200 units.

If the company sells 9,700 units, its net operating income should be closest to:

The margin of safety percentage is closest to:

The contribution margin ratio of Mountain Corporation's only product is 52%.The company's monthly fixed expense is $296,400 and the company's monthly target profit is $7,000.The dollar sales to attain that target profit is closest to:

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

The company's contribution margin ratio is closest to:

When expressed on a per unit basis, fixed costs can mislead decision makers into thinking of them as variable costs.

The break-even point in unit sales is closest to:

The following information pertains to Nova Co.'s cost-volume-profit relationships: How much will be contributed to net operating income by the 1,001st unit sold?

Bendel Inc.has an operating leverage of 7.3.If the company's sales increase by 3%, its net operating income should increase by about:

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?