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Exam 6: Cost-Volume-Profit Relationships

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Question 41

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

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Question 42

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Tropp Corporation sells a product for $10 per unit.The fixed expenses are $420,000 per month and the unit variable expenses are 60% of the selling price.What sales would be necessary in order for Tropp to realize a profit of 10% of sales?

A) $1,050,000
B) $945,000
C) $1,400,000
D) $840,000

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

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Question 43

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Bear Publishing sells a nature guide.The following information was reported for a typical month: What is Bear's current break-even point in unit and dollars?

Goodman Corporation has sales of 3,000 units at $80 per unit.Variable costs are 35% of the sales price.If total fixed costs are $66,000, the degree of operating leverage is:

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

Huitron Inc.expects its sales in September to be $143,000.The company's contribution margin ratio is 65% and its fixed monthly expenses are $62,000. Required: Estimate the company's net operating income for September, assuming that the fixed monthly expenses do not change.Show your work!

The margin of safety is the amount by which sales can decrease before losses are incurred by the company.

The margin of safety in dollars is closest to:

If sales increase to 6,020 units, the increase in net operating income would be closest to:

Haslem Inc.has provided the following data concerning its only product: Required: Compute the margin of safety in both dollars and as a percentage of sales.

Rachal Corporation produces and sells a single product whose selling price is $150.00 per unit and whose variable expense is $57.00 per unit.The company's monthly fixed expense is $381,300. Required: a.Assume the company's monthly target profit is $9,300.Determine the unit sales to attain that target profit.Show your work! b.Assume the company's monthly target profit is $18,600.Determine the dollar sales to attain that target profit.Show your work!

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!

Giannini Inc., which produces and sells a single product, has provided the following contribution format income statement for March: Required: Redo the company's contribution format income statement assuming that the company sells 5,500 units.

Frisch Corporation produces and sells a single product.Data concerning that product appear below: Required: Determine the monthly break-even in either unit or total dollar sales.Show your work!

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 believes that an $11,000 increase in the monthly advertising budget would result in a 100 unit increase in monthly sales.What should be the overall effect on the company's monthly net operating income of this change?

Iverson Corporation's variable expenses are 60% of sales.At a $400,000 sales level, the degree of operating leverage is 5.If sales increase by $40,000, the new degree of operating leverage will be (rounded) :

Knezevich Corporation makes a product that sells for $230 per unit.The product's current sales are 36,900 units and its break-even sales are 32,103 units. Required: Compute the margin of safety in both dollars and as a percentage of sales.

Naumann Corporation produces and sells a single product.Data concerning that product appear below: Fixed expenses are $234,000 per month.The company is currently selling 4,000 units per month. Required: Management is considering using a new component that would increase the unit variable cost by $7.Since the new component would improve 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 if fixed expenses are unaffected? Show your work!

The degree of operating leverage is computed by dividing sales by the contribution margin.

The break-even point for the entire company is closest to: