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Exam 5: Cost-Volume-Profit Relationships

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Question 51

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Nocum Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. If sales decline to 2,900 units,the net operating income would be closest to:

A) $29,000
B) $1,000
C) $8,700
D) $8,000

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Question 52

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On a CVP graph for a profitable company,the total expense line will be steeper than the total revenue line.

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Question 53

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Serfass Corporation's contribution format income statement for July appears below: The degree of operating leverage is closest to:

Souza Inc, which produces and sells a single product, has provided its contribution format income statement for October. -If the company sells 3,600 units,its total contribution margin should be closest to:

Break-even analysis assumes that:

If the degree of operating leverage is 4,then a one percent change in quantity sold should result in a four percent change in:

Sjostrom Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. -If the selling price increases by $3 per unit and the sales volume decreases by 600 units,the net operating income would be closest to:

Montesdeoca Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. Required: a.If sales decline to 1,900 units,what would be the estimated net operating income? b.If the selling price increases by $4 per unit and the sales volume decreases by 200 units,what would be the estimated net operating income? c.What is the break-even point in dollar sales?

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

Maruca Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. -The break-even point in dollar sales 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:

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?

Maziarz Corporation produces and sells a single product. Data concerning that product appear below: -Assume the company's target profit is $12,000.The dollar sales to attain that target profit is closest to:

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

A manufacturer of cedar shingles has supplied the following data: -The company's degree of operating leverage is closest to:

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. Consider each of the following questions independently. -This question is to be considered independently of all other questions relating to Lemelin Corporation.Refer to the original data when answering this question. The marketing manager would like to introduce sales commissions as an incentive for the sales staff.The marketing manager has proposed a commission of $20 per unit.In exchange,the sales staff would accept a decrease in their salaries of $113,000 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 300 units.What should be the overall effect on the company's monthly net operating income of this change?

Gayne Corporation's contribution margin ratio is 12% and its fixed monthly expenses are $84,000.If the company's sales for a month are $738,000,what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses do not change.

Liz,Inc.,produces and sells a single product.The product sells for $130.00 per unit and its variable expense is $48.10 per unit.The company's monthly fixed expense is $223,587. Required: Determine the monthly break-even in unit 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: