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Exam 5: Cost-Volume-Profit Relationships

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Question 71

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Mcmurtry Corporation sells a product for $170 per unit. The product's current sales are 10,000 units and its break-even sales are 8,100 units. The margin of safety as a percentage of sales is closest to:

A) 23%
B) 81%
C) 19%
D) 77%

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

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Question 72

Multiple Choice

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Last year Easton Corporation reported sales of $920,000, a contribution margin ratio of 40% and a net loss of $44,000. Based on this information, the break-even point was:

A) $810,000
B) $1,140,000
C) $964,000
D) $1,030,000

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

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Question 73

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Data concerning Lemelin Corporation's single product appear below: The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month.The marketing manager believes that an $11,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Goodman Corporation has sales volumes of 3,000 units at $80 per unit. Variable costs are 35% of the sales price. If total fixed costs are $66,000, the degree of operating leverage is:

Mishoe Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The break-even point in unit sales is closest to: (Round your intermediate calculations to 2 decimal places.)

Ingrum Corporation produces and sells two products. In the most recent month, Product R38T had sales of $29,500 and variable expenses of $8,140. Product X08S had sales of $50,500 and variable expenses of $39,860. The fixed expenses of the entire company were $35,080.The break-even point for the entire company is closest to:

Caneer Corporation produces and sells a single product. Data concerning that product appear below: The unit sales to attain the company's monthly target profit of $44,000 is closest to: (Round your intermediate calculations to 2 decimal places.)

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?

In describing the cost formula equation, Y = a + bX, which of the following is correct:

Junior Bodway, Incorporated, has provided the following budgeted data: What is the company's break-even point in sales dollars?

Data concerning Pellegren Corporation's single product appear below: Fixed expenses are $531,000 per month. The company is currently selling 4,000 units per month. The marketing manager would like to cut the selling price by $14 and increase the advertising budget by $35,000 per month. The marketing manager predicts that these two changes would increase monthly salesvolume by 500 units. What should be the overall effect on the company's monthly net operating income of this change?

Callander 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 $140.50 per unit. The best estimate of the total variable cost per unit is: (Round your intermediate calculations to 2 decimal places.)

Stockmaster Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The margin of safety in dollars is closest to:

Lofft Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Using the degree of operating leverage, the estimated percent increase in net operating income as the result of a 10% increase in salesvolume is closest to: (Round your intermediate calculations to 1 decimal place.)

Sufra Corporation is planning to sell 100,000 units for $3.20 per unit and will break even at this level of sales. Fixed expenses will be $111,000. What are the company's variable expenses per unit?

Jilk Incorporated's contribution margin ratio is 61% and its fixed monthly expenses are $43,000. 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 $128,000?

Malensek International, Incorporated, produces and sells a single product. The product sells for $240.00 per unit and its variable expense is $55.20 per unit. The company's monthly fixed expense is $249,480.Required:Determine the monthly break-even in total dollar sales.

The smaller the contribution margin ratio, the smaller the amount of sales required to cover a given amount of fixed expenses.

Mechem Corporation produces and sells a single product. In April, the company sold 2,000 units. Its total sales were $148,000, its total variable expenses were $78,900, and its total fixed expenses were $55,800.Required: a. Construct the company's contribution format income statement for April. (Do not round intermediate calculations.) b. Redo the company's contribution format income statement assuming that the company sells 1,900 units. (Do not round intermediate calculations.)

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.)