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
Contribution margin
Fixed Costs
Contribution Margin
Variable Costs
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?