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Exam 6: Cost-Volume-Profit Relationships

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Question 31

Multiple Choice

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Sufra Corporation is planning to sell 100,000 units for $8.00 per unit and will break even at this level of sales.Fixed expenses will be $300,000.What are the company's variable expenses per unit?

A) $5.00
B) $4.00
C) $3.00
D) $4.50

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

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Question 32

Multiple Choice

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The following data are available for the Phelps Corporation for a recent month: The break-even sales for the month for the company is closest to:

A) $91,667
B) $203,000
C) $148,000
D) $137,500

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

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Question 33

Multiple Choice

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Given the following data: The break-even point in dollars is:

Stockmaster Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The margin of safety in dollars is closest to:

Two companies with the same margin of safety in dollars will also have the same total contribution margin.

Newham Corporation produces and sells two products.In the most recent month, Product R10L had sales of $28,000 and variable expenses of $6,440.Product X96N had sales of $22,000 and variable expenses of $7,560.The fixed expenses of the entire company were $32,710.The break-even point for the entire company is closest to:

The margin of safety as a percentage of sales is closest to:

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

Assume the company's target profit is $14,000.The unit sales to attain that target profit is closest to:

Hedman Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. The margin of safety percentage is closest to:

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

The company's margin of safety in units is closest to:

If sales increase to 3,040 units, the increase in net operating income would be closest to:

Thomason Corporation has provided the following contribution format income statement.All questions concern situations that are within the relevant range. If the variable cost per unit increases by $1, spending on advertising increases by $2,000, and unit sales increase by 50 units, the net operating income would be closest to:

Sabv Corporation's break-even-point in sales is $675,000, and its variable expenses are 75% of sales.If the company lost $24,000 last year, sales must have amounted to:

Hamernik, Inc., 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.Show your work!

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

Stonebraker 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 9,040 units, what would be the estimated increase in 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 19,200 units, what would be the estimated net operating income? j.Estimate how many units must be sold to achieve a target profit of $26,100.

Sun 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 in dollars? b.What is the degree of operating leverage?

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?