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

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Question 61

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Last year Easton Corporation reported sales of $720,000, a contribution margin ratio of 30% and a net loss of $24,000. Based on this information, the break-even point was:

A) $640,000
B) $880,000
C) $744,000
D) $800,000

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

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Question 62

Multiple Choice

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A product sells for $10 per unit and has variable expenses of $6 per unit. Fixed expenses total $45,000 per month. How many units of the product must be sold each month to yield a monthly profit of $15,000?

A) 6,000 units
B) 3,750 units
C) 15,000 units
D) 10,000 units

E) None of the above
F) All of the above

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Question 63

Multiple Choice

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The July contribution format income statement of Raiche Corporation appears below: If the company's sales increase by 5%, its net operating income should increase by about:

Garcia Veterinary Clinic expects the following operating results next year: What is Garcia's break-even point next year in sales dollars?

The following is Arkadia Corporation's contribution format income statement for last month: The company has no beginning or ending inventories and produced and sold 20,000 units during the month. Required: a. What is the company's contribution margin ratio? b. What is the company's break-even in units? c. If sales increase by 100 units, by how much should net operating income increase? d. How many units would the company have to sell to attain a target profit of $125,000? e. What is the company's margin of safety in dollars? f. What is the company's degree of operating leverage?

Seiersen Corporation's contribution format income statement for February appears below: The degree of operating leverage is closest to:

Fost Corporation's contribution margin ratio is 20%. If the degree of operating leverage is 15 at the $225,000 sales level, net operating income at the $225,000 sales level must equal:

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

Froio Corporation produces and sells two products. Data concerning those products for the most recent month appear below: Fixed expenses for the entire company were $26,570. The break-even point for the entire company is closest to:

Closser Corporation produces and sells two products. In the most recent month, Product M50S had sales of $39,000 and variable expenses of $12,870. Product H50G had sales of $12,000 and variable expenses of $4,980. The fixed expenses of the entire company were $33,050. The break-even point for the entire company is closest to:

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

Marano Corporation produces and sells a single product. In October, the company sold 6,200 units. Its total sales were $223,200, its total variable expenses were $105,400, and its total fixed expenses were $100,400. Required: a. Construct the company's contribution format income statement for October. b. Redo the company's contribution format income statement assuming that the company sells 6,400 units.

Shauer, Inc., produces and sells a single product whose selling price is $150.00 per unit and whose variable expense is $33.00 per unit. The company's fixed expense is $436,410 per month. Required: Determine the monthly break-even in either unit or total dollar sales. Show your work!

Sammis Inc., which produces and sells a single product, has provided its contribution format income statement for January. If the company sells 2,600 units, its total contribution margin should be closest to:

The margin of safety in dollars equals the excess of actual sales over budgeted sales.

Sales in North Corporation increased from $60,000 per year to $63,000 per year while net operating income increased from $10,000 to $12,000. Given this data, the company's degree of operating leverage must have been:

A tile manufacturer has supplied the following data: What is the company's unit contribution margin?

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.

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

The overall contribution margin ratio for a company producing three products may be obtained by adding the contribution margin ratios for the three products and dividing the total by three.