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Exam 5: Cost-Volume-Profit Relationships

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Question 161

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

A) 75%
B) 67%
C) 25%
D) 33%

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

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Question 162

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

A) 44.8%
B) 62.0%
C) 68.6%
D) 21.3%

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

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Question 163

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A company with high operating leverage will experience a larger reduction in net operating income in a period of declining salesvolume than a company with low operating leverage.

For a capital intensive, automated company the break-even point will tend to be higher and the margin of safety will be lower than for a less capital intensive company with the same sales.

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 would like to cut the selling price by $18 and increase the advertising budget by $37,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,600 units. What should be the overall effect on the company's monthly net operating income of this change?

If sales volume increases and all other factors remain constant, then the:

The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: The best estimate of the total variable manufacturing cost per unit is: (Round your intermediate calculations to 2 decimal places.)

Sabv Corporation's break-even-point in sales is $990,000, and its variable expenses are 75% of sales. If the company lost $49,000 last year, sales must have amounted to:

In a Cost-Volume-Profit graph (sometimes called a break-even chart), unit volume is represented on the horizontal (X) axis and dollars on the vertical (Y) axis.

The management of Rutledge Corporation would like to better understand the behavior of the company's warranty costs. Those costs are listed below for a number of recent months: Management believes that warranty cost is a mixed cost that depends on the number of product returns.Required:Estimate the variable cost per product return and the fixed cost per month using the least-squares regression method.

Ingrum Corporation produces and sells two products. In the most recent month, Product R38T had sales of $20,000 and variable expenses of $7,400. Product X08S had sales of $39,000 and variable expenses of $6,170. The fixed expenses of the entire company were $41,160.The break-even point for the entire company is closest to: (Round your intermediate calculations to 2 decimal places.)

Dickus Corporation's only product sells for $100 per unit. Its current sales are 35,600 units and its break-even sales are 29,192 units.Required: Compute the margin of safety in both dollars and as a percentage of sales.

Moyas Corporation sells a single product for $25 per unit. Last year, the company's sales revenue was $295,000 and its net operating income was $75,000. If fixed expenses totaled $102,000 for the year, the break-even point in unit sales was:

Which of the following statements is true when referring to the high-low method of cost analysis?

Muzzillo Corporation has provided the following contribution format income statement. All questions concern situations that are within the relevant range. Required: a. If the selling price increases by $4 per unit and the sales volume decreases by 300 units, what would be the estimated net operating income? b. If the variable cost per unit increases by $6, spending on advertising increases by $3,000, and unit sales increase by 1,800 units, what would be the estimated net operating income?

Logsdon Corporation produces and sells a single product whose contribution margin ratio is 63%. The company's monthly fixed expense is $720,720 and the company's monthly target profit is $28,000. The dollar sales to attain that target profit is closest to:

Data concerning Strite Corporation's single product appear below: Assume the company's target profit is $17,000. The unit sales to attain that target profit is closest to:

Edal 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 variable manufacturing cost per unit is: (Round your intermediate calculations to 2 decimal places.)

A manufacturer of premium wire strippers has supplied the following data: The company's margin of safety in units is closest to: (Round per unit calculations to 2 decimal places.)

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.The total fixed overhead costs for Blaine Corporation are most likely closest to: