112. A manufacturer of cedar shingles has supplied the following data:
Bundles of cedar shakes produced and sold 280,000
Sales revenue $2,072,000
Variable manufacturing expense $1,134,000
Fixed manufacturing expense $436,000
Variable selling and administrative expense $238,000
Fixed selling and administrative expense $164,000
Net operating income $100,000
The company’s degree of operating leverage is closest to:
113. A manufacturer of tiling grout has supplied the following data:
Kilograms produced and sold 300,000
Sales revenue $1,950,000
Variable manufacturing expense $960,000
Fixed manufacturing expense $266,000
Variable selling and administrative expense $360,000
Fixed selling and administrative expense $232,000
Net operating income $132,000
The company’s break-even in unit sales is closest to:
114. A manufacturer of tiling grout has supplied the following data:
Kilograms produced and sold 300,000
Sales revenue $1,950,000
Variable manufacturing expense $960,000
Fixed manufacturing expense $266,000
Variable selling and administrative expense $360,000
Fixed selling and administrative expense $232,000
Net operating income $132,000
The company’s contribution margin ratio is closest to:
115. A manufacturer of tiling grout has supplied the following data:
Kilograms produced and sold 300,000
Sales revenue $1,950,000
Variable manufacturing expense $960,000
Fixed manufacturing expense $266,000
Variable selling and administrative expense $360,000
Fixed selling and administrative expense $232,000
Net operating income $132,000
The company’s degree of operating leverage is closest to:
116. Data concerning Marchman Corporation’s single product appear below:
Per Unit Percent of Sales
Selling price $120 100%
Variable expenses 72 60%
Contribution margin $48 40%
The company is currently selling 4,000 units per month. Fixed expenses are $166,000 per month.
Consider each of the following questions independently.
This question is to be considered independently of all other questions relating to Marchman
Corporation. Refer to the original data when answering this question.
Management is considering using a new component that would increase the unit variable cost by
$2. Since the new component would increase the features of the company’s product, the
marketing manager predicts that monthly sales would increase by 200 units. What should be the
overall effect on the company’s monthly net operating income of this change?
117. Data concerning Marchman Corporation’s single product appear below:
Per Unit Percent of Sales
Selling price $120 100%
Variable expenses 72 60%
Contribution margin $48 40%
The company is currently selling 4,000 units per month. Fixed expenses are $166,000 per month.
Consider each of the following questions independently.
This question is to be considered independently of all other questions relating to Marchman
Corporation. Refer to the original data when answering this question.
The marketing manager believes that a $6,000 increase in the monthly advertising budget would
result in a 130 unit increase in monthly sales. What should be the overall effect on the company’s
monthly net operating income of this change?
118. Data concerning Marchman Corporation’s single product appear below:
Per Unit Percent of Sales
Selling price $120 100%
Variable expenses 72 60%
Contribution margin $48 40%
The company is currently selling 4,000 units per month. Fixed expenses are $166,000 per month.
Consider each of the following questions independently.
This question is to be considered independently of all other questions relating to Marchman
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 $8 per unit. In exchange, the sales
staff would accept a decrease in their salaries of $27,000 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?
119. Data concerning Marchman Corporation’s single product appear below:
Per Unit Percent of Sales
Selling price $120 100%
Variable expenses 72 60%
Contribution margin $48 40%
The company is currently selling 4,000 units per month. Fixed expenses are $166,000 per month.
Consider each of the following questions independently.
This question is to be considered independently of all other questions relating to Marchman
Corporation. Refer to the original data when answering this question.
The marketing manager would like to cut the selling price by $7 and increase the advertising
budget by $11,000 per month. The marketing manager predicts that these two changes would
increase monthly sales by 800 units. What should be the overall effect on the company’s monthly
net operating income of this change?
120. Bohlen Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit Percent of Sales
Selling price $180 100%
Variable expenses 36 20%
Contribution margin $144 80%
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 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?
121. Bohlen Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit Percent of Sales
Selling price $180 100%
Variable expenses 36 20%
Contribution margin $144 80%
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.
Management is considering using a new component that would increase the unit variable cost by
$8. 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?
122. Bohlen Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit Percent of Sales
Selling price $180 100%
Variable expenses 36 20%
Contribution margin $144 80%
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?
123. Bohlen Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit Percent of Sales
Selling price $180 100%
Variable expenses 36 20%
Contribution margin $144 80%
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?
124. Boenisch Corporation produces and sells a single product with the following
characteristics:
Per Unit Percent of Sales
Selling price $170 100%
Variable expenses 102 60%
Contribution margin $68 40%
The company is currently selling 8,000 units per month. Fixed expenses are $406,000 per month.
Consider each of the following questions independently.
This question is to be considered independently of all other questions relating to Boenisch
Corporation. Refer to the original data when answering this question.
Management is considering using a new component that would increase the unit variable cost by
$3. 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?