FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 2: Costvolumeprofit Relationships

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Essay

Review LaterAdd Note

Review Later

Zaccaria Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. Required: a. What is the contribution margin ratio? b. If sales increase to 5,040 units, what would be the estimated increase in net operating income? c. If the selling price increases by $4 per unit and the sales volume decreases by 400 units, what would be the estimated net operating income? d. What is the break-even point in unit sales? e. What is the margin of safety in dollars? f. What is the degree of operating leverage?

Correct Answer

verified

a. CM ratio = Contribution margin ÷ Sale...

View Answer

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

Cobble Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $499,000 per month. The company is currently selling 5,000 units per month. The marketing manager would like to cut the selling price by $13 and increase the advertising budget by $33,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 900 units. What should be the overall effect on the company's monthly net operating income of this change?

A) increase of $56,100
B) decrease of $8,900
C) increase of $99,300
D) decrease of $56,100

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

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

Highjinks, Inc., has provided the following budgeted data: How many units would the company have to sell in order to have a net operating income equal to 5% of total sales dollars?

Last year Easton Corporation reported sales of $480,000, a contribution margin ratio of 25% and a net loss of $16,000. Based on this information, the break-even point was:

Singapore Candy Cane Corporation is a single product firm with the following cost structure for next year: What is the company's break-even point next year in sales dollars? (Round your intermediate calculations to 2 decimal places.)

Borich Corporation produces and sells a single product. Data concerning that product appear below: The break-even in monthly unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)

Maziarz Corporation produces and sells a single product. Data concerning that product appear below: Assume the company's target profit is $14,000. The unit sales to attain that target profit is closest to: (Round your intermediate calculations to 2 decimal places.)

To obtain the dollar sales volume necessary to attain a given target profit, which of the following formulas should be used?

The degree of operating leverage in a company is smallest at the break-even point and increases as sales rise.

Steffen Corporation has three products with the following characteristics: The overall contribution margin ratio for the company as a whole is closest to:

The degree of operating leverage is computed by dividing sales by the contribution margin.

Cleghorn 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!

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

Sun Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. Required: a. What is the margin of safety in dollars? b. What is the degree of operating leverage?

Mio Canoe Livery rents canoes and transports canoes and customers to and from their canoe trip on a local river. The trip is priced at $20 per person and has a CM ratio of 30%. Mio's fixed expenses are $84,000. Last year, sales were $400,000 and profit was $36,000. How many units need to be sold to break-even, and how many need to be sold to earn a profit of $42,000?

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

Remmel Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. If sales increase to 6,020 units, the increase in net operating income would be closest to:

Mossfeet Shoe Corporation is a single product firm. The company is predicting that a price increase next year will not cause unit sales to decrease. What effect would this price increase have on the following items for next year?

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

A shift in the sales mix from products with high contribution margin ratios toward products with low contribution margin ratios will raise the break-even point for the company as a whole.