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Exam 6: Variable Costing and Segment Reporting: Tools for Management

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Question 71

Multiple Choice

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Garth Corporation sells a single product. If the selling price per unit and the variable expense per unit both increase by 10% and fixed expenses do not change, then:

A) Option A
B) Option B
C) Option C
D) Option D

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

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Question 72

Multiple Choice

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Upchurch Corporation produces and sells a single product. Data concerning that product appear below: Assume the company's target profit is $12,000. The unit sales to attain that target profit is closest to:

A) 3,242 units
B) 4,912 units
C) 9,535 units
D) 5,896 units

E) A) and B)
F) None of the above

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Question 73

Multiple Choice

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Carlton Corporation sells a single product at a selling price of $40 per unit. Variable expenses are $22 per unit and fixed expenses are $82,800. Carlton's break-even point is:

Macmullen Corporation produces and sells two products. Data concerning those products for the most recent month appear below: The fixed expenses of the entire company were $30,970. If the sales mix were to shift toward Product D08Q with total dollar sales remaining constant, the overall break-even point for the entire company:

Blackner Corporation produces and sells a single product. Data concerning that product appear below: The break-even in monthly dollar sales is closest to:

As total sales increase beyond the break-even point, the degree of operating leverage will decrease.

Data concerning Matsumoto Corporation's single product appear below: Assume the company's target profit is $5,000. The unit sales to attain that target profit is closest to:

Reynold Enterprises sells a single product for $25. The variable expense per unit is $15 and the fixed expense per unit is $5 at the current level of sales. The company's net operating income will increase by $10 if one more unit is sold.

The unit sales volume necessary to reach a target profit is determined by dividing the sum of the fixed expenses and the target profit by the contribution margin per unit.

Maddaloni International, Inc., produces and sells a single product. The product sells for $160.00 per unit and its variable expense is $46.40 per unit. The company's monthly fixed expense is $219,248. Required: Determine the monthly break-even in total dollar sales. Show your work!

Data concerning Matsumoto Corporation's single product appear below: Assume the company's target profit is $8,000. The dollar sales to attain that target profit is closest to:

Data concerning Hinkson Corporation's single product appear below: Fixed expenses are $720,000 per month. The company is currently selling 8,000 units 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 $9 per unit. In exchange, the sales staff would accept a decrease in their salaries of $60,000 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 100 units. What should be the overall effect on the company's monthly net operating income of this change?

One way to compute the total contribution margin is to deduct total fixed expenses from net operating income.

A manufacturer of cedar shingles has supplied the following data: The company's break-even in unit sales is closest to:

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

Gonyo Inc., which produces and sells a single product, has provided the following contribution format income statement for December: Required: Redo the company's contribution format income statement assuming that the company sells 3,400 units.

Bohlen Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $716,000 per month. The company is currently selling 6,000 units per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Bohlen Corporation. Refer to the original data when answering this question. The marketing manager would like to cut the selling price by $17 and increase the advertising budget by $42,000 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,000 units. What should be the overall effect on the company's monthly net operating income of this change?

Gilpatric Corporation produces and sells two products. In the most recent month, Product Q71M had sales of $28,000 and variable expenses of $7,840. Product V04P had sales of $49,000 and variable expenses of $27,580. The fixed expenses of the entire company were $34,630. The break-even point for the entire company is closest to:

Data concerning Massing Corporation's single product appear below: The company is currently selling 9,000 units per month. Fixed expenses are $837,000 per month. The marketing manager believes that a $16,000 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?

Bohlen Corporation produces and sells a single product. Data concerning that product appear below: Fixed expenses are $716,000 per month. The company is currently selling 6,000 units per month. Consider each of the following questions independently. This question is to be considered independently of all other questions relating to Bohlen Corporation. Refer to the original data when answering this question. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $16 per unit. In exchange, the sales staff would accept a decrease in their salaries of $84,000 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 600 units. What should be the overall effect on the company's monthly net operating income of this change?