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67) Sabv Corporation's break-even-point in sales is $675,000, and its variable expenses are 75%
of sales. If the company lost $24,000 last year, sales must have amounted to:
A) $651,000
B) $579,000
C) $603,000
D) $471,000
68) Last year Easton Corporation reported sales of $480,000, a contribution margin ratio of 25%
and a net loss of $16,000. Based on this information, the break-even point was:
A) $435,000
B) $544,000
C) $506,000
D) $600,000
69) Black Corporation's sales are $600,000, its fixed expenses are $150,000, and its variable
expenses are 60% of sales. The margin of safety is:
A) $90,000
B) $190,000
C) $225,000
D) $240,000
70) Awtis Corporation has a margin of safety percentage of 20% based on its actual sales. The
break-even point is $500,000 and the variable expenses are 60% of sales. Given this information,
the actual profit is:
A) $65,000
B) $55,000
C) $50,000
D) $41,500
71) 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
72) Hopi Corporation expects the following operating results for next year:
Sales
$
400,000
Margin of safety
$
100,000
Contribution margin ratio
75
%
Degree of operating leverage
4
What is Hopi expecting total fixed expenses to be next year?
A) $75,000
B) $100,000
C) $200,000
D) $225,000
73) 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):
A) 3.67
B) 2.86
C) 5.25
D) 5.00
74) Data concerning Dorazio Corporation's single product appear below:
Per Unit
Percent of Sales
Selling price
$
160
100
%
Variable expenses
48
30
%
Contribution margin
$
112
70
%
Fixed expenses are $87,000 per month. The company is currently selling 1,000 units per month.
Management is considering using a new component that would increase the unit variable cost by
$28. Since the new component would increase the features of the company's product, the
marketing manager predicts that monthly sales would increase by 400 units. What should be the
overall effect on the company's monthly net operating income of this change?
A) increase of $5,600
B) increase of $33,600
C) decrease of $5,600
D) decrease of $33,600
75) Kuzio Corporation produces and sells a single product. Data concerning that product appear
below:
Per Unit
Percent of Sales
Selling price
$
130
100
%
Variable expenses
78
60
%
Contribution margin
$
52
40
%
The company is currently selling 6,000 units per month. Fixed expenses are $263,000 per month.
The marketing manager believes that a $5,000 increase in the monthly advertising budget would
result in a 140 unit increase in monthly sales. What should be the overall effect on the company's
monthly net operating income of this change?
A) increase of $2,280
B) increase of $7,280
C) decrease of $5,000
D) decrease of $2,280
76) Data concerning Pellegren Corporation's single product appear below:
Per Unit
Percent of Sales
Selling price
$
200
100
%
Variable expenses
40
20
%
Contribution margin
$
160
80
%
Fixed expenses are $531,000 per month. The company is currently selling 4,000 units per month.
The marketing manager would like to cut the selling price by $14 and increase the advertising
budget by $35,000 per month. The marketing manager predicts that these two changes would
increase monthly sales by 500 units. What should be the overall effect on the company's monthly
net operating income of this change?
A) decrease of $18,000
B) increase of $38,000
C) decrease of $38,000
D) increase of $58,000
77) Warbler Gift's reported the following information for the sales of their single product:
Total
Per Unit
Sales
$
300,000
$
10
Variable expenses
180,000
6
Contribution margin
120,000
$
4
Fixed expenses
100,000
Net operating income
$
20,000
Warbler's salesmen have proposed to decrease the selling price by 50 cents per unit. How many
units will need to be sold for Warbler to earn at least the same net operating income?
A) 5,715 units
B) 36,000 units
C) 34,286 units
D) 28,572 units
78) Data concerning Bazin Corporation's single product appear below:
Per Unit
Percent of Sales
Selling price
$
100
100
%
Variable expenses
20
20
%
Contribution margin
$
80
80
%
Fixed expenses are $384,000 per month. The company is currently selling 6,000 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 $46,000 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 500 units. What should be the overall effect on the
company's monthly net operating income of this change?
A) increase of $27,500
B) decrease of $64,500
C) increase of $41,500
D) increase of $507,500
79) Chovanec Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$
170
100
%
Variable expenses
68
40
%
Contribution margin
$
102
60
%
Fixed expenses are $521,000 per month. The company is currently selling 7,000 units per month.
Management is considering using a new component that would increase the unit variable cost by
$6. Since the new component would increase the features of 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?
A) decrease of $48,000
B) decrease of $6,000
C) increase of $48,000
D) increase of $6,000
80) How much will a company's net operating income change if it undertakes an advertising
campaign given the following data:
Cost of advertising campaign
$
25,000
Variable expense as a percentage of sales
42
%
Increase in sales
$
60,000
A) $200 increase
B) $25,200 increase
C) $15,000 increase
D) $9,800 increase
81) Data concerning Kardas Corporation's single product appear below:
Per Unit
Percent of Sales
Selling price
$
140
100
%
Variable expenses
28
20
%
Contribution margin
$
112
80
%
The company is currently selling 8,000 units per month. Fixed expenses are $719,000 per month.
The marketing manager believes that a $20,000 increase in the monthly advertising budget
would result in a 180 unit increase in monthly sales. What should be the overall effect on the
company's monthly net operating income of this change?
A) decrease of $160
B) increase of $20,160
C) decrease of $20,000
D) increase of $160
82) Cobble Corporation produces and sells a single product. Data concerning that product appear
below:
Per Unit
Percent of Sales
Selling price
$
160
100
%
Variable expenses
48
30
%
Contribution margin
$
112
70
%
Fixed expenses are $499,000 per month. The company is currently selling 5,000 units per month.
The marketing manager would like to cut the selling price by $13 and increase the advertising
budget by $33,000 per month. The marketing manager predicts that these two changes would
increase monthly sales by 900 units. What should be the overall effect on the company's monthly
net operating income of this change?
A) increase of $56,100
B) decrease of $8,900
C) increase of $99,300
D) decrease of $56,100
83) Sannella Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$
220
100
%
Variable expenses
66
30
%
Contribution margin
$
154
70
%
Fixed expenses are $991,000 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 $11 per unit. In exchange, the sales
staff would accept a decrease in their salaries of $74,000 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 200 units. What should be the overall effect on the
company's monthly net operating income of this change?
A) increase of $1,246,600
B) increase of $14,600
C) decrease of $133,400
D) increase of $71,800
84) Wenstrom Corporation produces and sells a single product. Data concerning that product
appear below:
Selling price per unit
$
130.00
Variable expense per unit
41.60
Fixed expense per month
$
109,616
The break-even in monthly dollar sales is closest to:
A) $342,550
B) $204,455
C) $109,616
D) $161,200
85) Borich Corporation produces and sells a single product. Data concerning that product appear
below:
Selling price per unit
$
150.00
Variable expense per unit
73.50
Fixed expense per month
$
308,295
The break-even in monthly unit sales is closest to:
A) 2,055
B) 4,030
C) 4,194
D) 3,426
86) Data concerning Follick Corporation's single product appear below:
Selling price per unit
$
110.00
Variable expense per unit
$
30.80
Fixed expense per month
$
321,552
The break-even in monthly dollar sales is closest to:
A) $1,148,400
B) $638,851
C) $321,552
D) $446,600
