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Exam 5: Cost-Volume-Profit Relationships

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Question 21

True/False

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The break-even point in units can be obtained by dividing total fixed expenses by the unit contribution margin.

A) True
B) False

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Question 22

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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:

A) $1,000.00
B) $800.00
C) $200.00
D) $3.33

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

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Question 23

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Mason Corporation's selling price was $20 per unit. Fixed expenses totaled $54,000, variable expenses were $14 per unit, and the company reported a profit of $9,000 for the year. The break-even point for Mason Corporation is:

Cleghorn Corporation produces and sells a single product. Data concerning that product appear below: Required:Determine the monthly break-even in total dollar sales.

The Blaine Corporation is a highly automated manufacturer. At an activity level of 6,000 machine setups, total overhead costs equal $240,000. Of this amount, depreciation totals $80,000 (all fixed) and lubrication totals $72,000 (all variable) . The remaining $88,000 of the total overhead cost consists of utility cost (mixed) . At an activity level of 9,000 setups, utility cost totals $112,000.Assume that the relevant range includes all of the activity levels mentioned in this problem.If 7,800 setups are projected for the next period, total expected overhead cost would be closest to:

Cubie Corporation has provided the following data concerning its only product: What is the margin of safety in dollars?

A major advantage of the high-low method of cost estimation is that it omits all data from the analysis other than the lowest and highest costs.

Lister Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. If sales increase to 3,040 units, the increase in net operating income would be closest to: (Round your intermediate calculations to 2 decimal places.)

Hamernik, Incorporated, produces and sells a single product whose selling price is $240.00 per unit and whose variable expense is $72.00 per unit. The company's fixed expense is $372,960 per month.Required:Determine the monthly break-even in either unit or total dollar sales.

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

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

Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following: What is the company's contribution margin for this year? (Round your intermediate calculations to 2 decimal places.)

Jilk Incorporated's contribution margin ratio is 58% and its fixed monthly expenses are $36,000. 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 $103,000?

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

Keomuangtai Corporation produces and sells a single product. The company has provided its contribution format income statement for October. If the company sells 4,500 units, its total contribution margin should be closest to:

Awtis Corporation has a margin of safety percentage of 20% based on its actual sales. The break-even point is $500,000 and the variable expenses are 60% of sales. Given this information, the actual profit is:

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:

Langin 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 percentage? b. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 15% increase in sales?

Thornbrough Corporation produces and sells a single product with the following characteristics: The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month.Management is considering using a new component that would increase the unit variable cost by $11. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 500 units. What should be the overall effect on the company's monthly net operating income of this change?

Wight Corporation has provided its contribution format income statement for June. The company produces and sells a single product. If the company sells 9,700 units, its net operating income should be closest to: