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Exam 5: Cost-Volume-Profit Relationships

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Question 31

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Wilson Corporation's activity for the first six of the current year is as follows: Using the high-low method, the variable cost per machine hour would be:

A) $0.67
B) $0.64
C) $0.40
D) $0.60

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

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Question 32

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Data concerning Milian Corporation's single product appear below: Fixed expenses are $66,000 per month. The company is currently selling 1,000 units per month.Required:Management is considering using a new component that would increase the unit variable cost by $15. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 200 units. What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected?

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Because fixed expenses are no...

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Question 33

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Data concerning Cavaluzzi Corporation's single product appear below: Fixed expenses are $440,000 per month. The company is currently selling 8,000 units per month.Required: The marketing manager believes that an $8,000 increase in the monthly advertising budget would result in a 150 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Data concerning Dorazio Corporation's single product appear below: Fixed expenses are $87,000 per month. The company is currently selling 1,000 units per month. Management is considering using a new component that would increase the unit variable cost by $28. Since the new component would increase the features of the company's product, the marketing manager predicts that monthly sales would increase by 400 units. What should be the overall effect on the company's monthly net operating income of this change?

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

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

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.The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $11 per unit. In exchange, the sales staff would accept a decrease in their salaries of $65,000 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?

Gamach 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 $104.50 per unit. The best estimate of the total monthly fixed cost is:

Shelhorse Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $343,000 per month. The company is currently selling 3,800 units per month. Required: The marketing manager believes that a $12,000 increase in the monthly advertising budget would result in a 120 unit increase in monthly sales. What should be the overall effect on the company's monthly net operating income of this change?

Jerrel Corporation sells a product for $230 per unit. The product's current sales are 24,000 units and its break-even sales are 17,280 units.The margin of safety as a percentage of sales is 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?

Seifer Incorporated's inspection costs are listed below: Management believes that inspection cost is a mixed cost that depends on the number of units produced. Using the least-squares regression method, the estimates of the variable and fixed components of inspection cost would be closest to:

The management of Hamano Corporation would like for you to analyze their repair costs, which are listed below: Management believes that repair cost is a mixed cost that depends on the number of machine-hours. Using the least-squares regression method, the estimates of the variable and fixed components of repair cost would be closest to:

The total volume in sales dollars that would be required to attain a given target profit is determined by dividing the target profit by the contribution margin ratio.

A manufacturer of tiling grout has supplied the following data: The company's degree of operating leverage is closest to:

Highjinks, Incorporated, has provided the following budgeted data: What is the company's margin of safety as a percentage of sales?

Sjostrom Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. If the variable cost per unit increases by $10, spending on advertising increases by $1,500, and unit sales increase by 15,800 units, the net operating income would be closest to:

The R ² (i.e., R-squared) varies from 0% to 100%, and the lower the percentage, the better the fit of the data to a straight line.

Compton Corporation is a wholesale distributor of educational CD-ROMs. The company's records indicate the following: Using the high-low method of analysis, what are the company's estimated variable selling and administrative expenses per unit?

Kuzio Corporation produces and sells a single product. Data concerning that product appear below: The company is currently selling 6,000 units per month. Fixed expenses are $263,000 per month. The marketing manager believes that a $5,000 increase in the monthly advertising budget would result in a 140 unit increase in monthly sales volume. What should be the overall effect on the company's monthly net operating income of this change?