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Exam 6: Cost-Volume-Profit Relationships

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Question 51

Multiple Choice

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Contribution margin is the amount remaining after:

A) variable expenses have been deducted from sales revenue.
B) fixed expenses have been deducted from sales revenue.
C) fixed expenses have been deducted from variable expenses.
D) cost of goods sold has been deducted from sales revenues.

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

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Question 52

Multiple Choice

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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:

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

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

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Question 53

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Bohlen Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $716,000 per month.The company is currently selling 6,000 units per month.Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Bohlen Corporation.Refer to the original data when answering this question. The marketing manager would like to cut the selling price by $17 and increase the advertising budget by $42,000 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?

Joly Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $511,000 per month.The company is currently selling 5,000 units per month.The marketing manager would like to cut the selling price by $16 and increase the advertising budget by $33,000 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?

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:

If a company decreases the variable expense per unit while increasing the total fixed expenses,the total expense line relative to its previous position will:

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

Alpha Corporation reported the following data for its most recent year: sales,$500,000;variable expenses,$300,000;and fixed expenses,$150,000.The company's degree of operating leverage is:

Pultz 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!

Froio Corporation produces and sells two products.Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $26,570. If the sales mix were to shift toward Product M06M with total sales remaining constant,the overall break-even point for the entire company:

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:

Mahaxay Corporation has provided its contribution format income statement for April. 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 9% increase in sales.

Hargenrader Inc.produces and sells two products.During the most recent month,Product P02S's sales were $24,000 and its variable expenses were $7,920.Product O50U's sales were $41,000 and its variable expenses were $14,180.The company's fixed expenses were $40,350. Required: a.Determine the overall break-even point for the company in total sales dollars.Show your work! b.If the sales mix shifts toward Product P02S with no change in total sales,what will happen to the break-even point for the company? Explain.

A manufacturer of tiling grout has supplied the following data: The company's contribution margin ratio is closest to:

For a capital intensive,automated company the break-even point will tend to be higher and the margin of safety will be lower than for a less capital intensive company with the same sales.

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:

Macmullen Corporation produces and sells two products.Data concerning those products for the most recent month appear below: The fixed expenses of the entire company were $30,970.If the sales mix were to shift toward Product D08Q with total dollar sales remaining constant,the overall break-even point for the entire company:

The contribution margin ratio is equal to:

The July contribution format income statement of Raiche Corporation appears below: The degree of operating leverage is closest to:

Assume a company sells a single product.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 break-even point in sales dollars is: