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76.
Operating leverage refers to the extent to which an organization's cost structure is made
up of:
77.
A decrease in the margin of safety would be caused by a(n):
78.
Given the following data:
Per Unit
Total
Sales
$15
$45,000
Less variable expenses
9
27,000
Contribution margin
6
18,000
Less fixed expenses
12,000
Net income
$6,000
79.
The following pertains to Upton Co. for the year ending December 31, 2016:
Budgeted Sales
$1,000,000
Break-even Sales
700,000
Budgeted Contribution Margin
600,000
Cashflow Break-even
200,000
Upton's margin of safety is: (CPA adapted)
80.
The margin of safety percentage is computed as:
81.
The amount by which a company's sales can decline before losses are incurred is called
the:
82.
The degree of operating leverage can be calculated as:
83.
All other things the same, which of the following would be true of the contribution margin
and variable costs of a company with high fixed costs and low variable costs as compared
to a company with low fixed costs and high variable costs?
Contribution Margin
Variable Costs
A.
Higher
Higher
B.
Lower
Higher
C.
Higher
Lower
D.
Lower
Lower
84.
Corey Company has a margin of safety percentage of 20%. The break-even point is
$200,000 and the variable costs are 45% of sales. Given this information, the operating
profit is:
85.
Luxus, Inc. employs 45 sales personnel to market its line of luxury automobiles. The
average car sells for $23,000, and a 6 percent commission is paid to the salesperson.
Luxus Motors is considering a change to the commission arrangement where the company
would pay each salesperson a salary of $2,000 per month plus a commission of 2 percent
of the sales made by that salesperson. The amount of total monthly car sales at which
Luxus Motors would be indifferent as to which plan to select is:
86.
Given the following information:
Sales
$5,000
Fixed Expenses
2,000
Variable Expenses
1,750
What would expected net income be if the company experienced a 10 percent increase in
fixed costs and a 10 percent increase in sales volume?
87.
The Terrence Co. manufactures two products, Baubles and Trinkets. The following are
projections for the coming year:
Baubles
Trinkets
10,000 units
5,000 units
Sales
10,000
10,000
Costs:
Fixed
$2,000
$4,600
Variable
6,000
8,000
4,000
8,600
Income
before
taxes
$2,000
$1,400
88.
89.
Honeysuckle Manufacturing has the following data:
Selling Price
$60
Variable manufacturing cost
$33
Fixed manufacturing cost
$250,000
per
month
Variable selling &
administrative costs
$9
Fixed selling & administrative
costs
$120,000
per
month
What dollar sales volume does Honeysuckle need to break even?
90.
Honeysuckle Manufacturing has the following data:
Selling Price
$60
Variable manufacturing cost
$33
Fixed manufacturing cost
$250,000
per
month
Variable selling &
administrative costs
$9
Fixed selling & administrative
costs
$120,000
per
month
What dollar sales volume does Honeysuckle need to achieve a $50,000 operating profit
per month?
91.
Honeysuckle Manufacturing has the following data:
Selling Price
$60
Variable manufacturing cost
$33
Fixed manufacturing cost
$250,000
per
month
Variable selling &
administrative costs
$9
Fixed selling & administrative
costs
$120,000
per
month
92.
Market Sales had $1,200,000 in sales last month. The variable cost ratio was 60% and
operating profits were $80,000. What is Market's break-even sales volume?
93.
Market Sales had $1,200,000 in sales last month. The variable cost ratio was 60% and
operating profits were $80,000. What sales volume does Market's need to yield a $200,000
operating profit?
94.
Market Sales had $1,200,000 in sales last month. The variable cost ratio was 60% and
operating profits were $80,000. What is Market's margin of safety in sales dollars?
95.
Artis Sales has two store locations. Store A has fixed costs of $125,000 per month and a
variable cost ratio of 60%. Store B has fixed costs of $200,000 per month and a variable
cost ratio of 30%. At what sales volume would the two stores have equal profits or losses?
96.
Artis Sales has two store locations. Store A has fixed costs of $125,000 per month and a
variable cost ratio of 60%. Store B has fixed costs of $200,000 per month and a variable
cost ratio of 30%. What is the break-even sales volume for Store B?
97.
Artis Sales has two store locations. Store A has fixed costs of $125,000 per month and a
variable cost ratio of 60%. Store B has fixed costs of $200,000 per month and a variable
cost ratio of 30%. What is the break-even sales volume for Store A?
98.
Liu Sales has two store locations. Sanford has fixed costs of $250,000 per month and a
contribution margin ratio of 35%. Orlando has fixed costs of $400,000 per month and a
contribution margin ratio of 65%. At what sales volume would the two stores have equal
profits or losses?
99.
A company's break-even point will not be changed by:
100.
Lake Sales had $2,200,000 in sales last month. The contribution margin ratio was 30% and
operating profits were $180,000. What is Lake's break-even sales volume?
