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Exam 5: Cost-Volume-Profit Relationships

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Question 191

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Rachal Corporation produces and sells a single product whose selling price is $150.00 per unit and whose variable expense is $57.00 per unit. The company's monthly fixed expense is $381,300.Required:a. Assume the company's monthly target profit is $9,300. Determine the unit sales to attain that target profit.b. Assume the company's monthly target profit is $18,600. Determine the dollar sales to attain that target profit.

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a.Unit sales to attain target profit = ...

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Question 192

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Creswell Corporation's fixed monthly expenses are $30,000 and its contribution margin ratio is 63%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $92,000?

A) $4,040
B) $57,960
C) $27,960
D) $62,000

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

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Question 193

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A quick look at a scattergraph of cost versus activity can reveal that there is little relation between the cost and the activity or that the relation is something other than a simple straight line. In such cases, least square regression is highly recommended for estimating fixed and variable costs.

Black Corporation's sales are $600,000, its fixed expenses are $150,000, and its variable expenses are 60% of sales. The margin of safety is:

Maruca Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The break-even point in dollar sales is closest to:

Hiss Corporation's activity for the last six months is as follows: Using the high-low method of analysis, the estimated fixed cost per month for electricity is closest to: (Round your intermediate calculations to 2 decimal places.)

Babuca Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total monthly fixed manufacturing cost is: (Round your intermediate calculations to 2 decimal places.)

Larker Brothers, Incorporated, used the high-low method to derive its cost formula for electrical power cost. According to the cost formula, the variable cost per unit of activity is $4 per machine-hour. Total electrical power cost at the high level of activity was $19,200 and at the low level of activity was $18,400. If the high level of activity was 3,300 machine hours, then the low level of activity was:

Schister Systems uses the following data in its Cost-Volume-Profit analyses: What is total contribution margin if sales volume increases by 20%?

Your boss would like you to estimate the fixed and variable components of a particular cost. Actual data for this cost over four recent periods appear below. Using the least-squares regression method, what is the cost formula for this cost?

Carver Corporation produces a product which sells for $40. Variable manufacturing costs are $18 per unit. Fixed manufacturing costs are $5 per unit based on the current level of sales volume, and fixed selling and administrative costs are $4 per unit. A selling commission of 15% of the selling price is paid on each unit sold. The contribution margin per unit is:

Jorgenson Corporation has provided the following data for the first five months of the year: Using the least-squares regression method of analysis, the estimated variable lubrication cost per machine hour is closest to:

Junior Bodway, Incorporated, has provided the following budgeted data: At the budgeted sales level of 10,000 units, what is the company's degree of operating leverage?

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

Below are cost and activity data for a particular cost over the last four periods. Your boss has asked you to analyze this cost so that management will have a better understanding of how this cost changes in response to changes in activity. Required:Using the least-squares regression method, estimate the cost formula for this cost.

Coultrap Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The contribution margin per unit is closest to:

Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $27,520 and variable expenses of $6,880. Product Y45E had sales of $31,160 and variable expenses of $17,138. The fixed expenses of the entire company were $23,600. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:

Warrix Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. If salesvolumes increase to 3,020 units, the increase in net operating income would be closest to:

Hara Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $159.80 per unit. The best estimate of the total variable cost per unit is: (Round your intermediate calculations to 2 decimal places.)

Kuzio Corporation produces and sells a single product. Data concerning that product appear below: The company is currently selling 5,600 units per month. Fixed expenses are $194,000 per month. The marketing manager believes that a $5,300 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?