143.
Mcallister Corporation has provided the following data concerning its only product:
Selling price
$150 per unit
Current sales
39,900 units
Break-even sales
31,521 units
Margin of safety (in dollars)
$1,256,850
The margin of safety as a percentage of sales is closest to:
144.
The July contribution format income statement of Raiche Corporation appears below:
Sales
$510,600
Variable expenses
255,300
Contribution margin
255,300
Fixed expenses
217,300
Net operating income
$38,000
The degree of operating leverage is closest to:
145.
The July contribution format income statement of Raiche Corporation appears below:
Sales
$510,600
Variable expenses
255,300
Contribution margin
255,300
Fixed expenses
217,300
Net operating income
$38,000
If the company’s sales increase by 5%, its net operating income should increase by about:
146.
Stoppkotte Corporation has provided its contribution format income statement for April.
Sales
$703,000
Variable expenses
444,000
Contribution margin
259,000
Fixed expenses
184,200
Net operating income
$74,800
147.
Stoppkotte Corporation has provided its contribution format income statement for April.
Sales
$703,000
Variable expenses
444,000
Contribution margin
259,000
Fixed expenses
184,200
Net operating income
$74,800
If the company’s sales increase by 10%, its net operating income should increase by
about:
148.
Froio Corporation produces and sells two products. Data concerning those products for
the most recent month appear below:
Product M06M
Product Q20I
Sales
$11,000
$38,000
Variable expenses
$2,420
$16,690
Product M06M
Product Q20I
Sales
$11,000
$38,000
Variable expenses
Contribution margin
Fixed expenses for the entire company were $26,570.
If the sales mix were to shift toward Product M06M with total sales remaining constant,
the overall break-even point for the entire company:
149.
Froio Corporation produces and sells two products. Data concerning those products for
the most recent month appear below:
Product M06M
Product Q20I
Sales
$11,000
$38,000
Variable expenses
$2,420
$16,690
Sales (a)
Variable expenses
Contribution margin (b)
Fixed expenses for the entire company were $26,570.
The break-even point for the entire company is closest to:
150.
Gilpatric Corporation produces and sells two products. In the most recent month, Product
Q71M had sales of $28,000 and variable expenses of $7,840. Product V04P had sales of
$49,000 and variable expenses of $27,580. The fixed expenses of the entire company were
$34,630.
The break-even point for the entire company is closest to:
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151.
Gilpatric Corporation produces and sells two products. In the most recent month, Product
Q71M had sales of $28,000 and variable expenses of $7,840. Product V04P had sales of
$49,000 and variable expenses of $27,580. The fixed expenses of the entire company were
$34,630.
If the sales mix were to shift toward Product Q71M with total sales remaining constant,
the overall break-even point for the entire company:
Essay Questions
152.
In December, Mccullum Corporation sold 2,900 units of its only product. Its total sales
were $281,300, its total variable expenses were $130,500, and its total fixed expenses
were $122,600.
Required:
a. Construct the company’s contribution format income statement for December.
b. Redo the company’s contribution format income statement assuming that the company
sells 3,100 units.
153.
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.
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154.
Gonyo Inc., which produces and sells a single product, has provided the following
contribution format income statement for December:
Sales (3,200 units)
$252,800
Variable expenses
118,400
Contribution margin
134,400
Fixed expenses
113,600
Net operating income
$20,800
Sales (3,400 units)
$268,600
Variable expenses
125,800
Contribution margin
142,800
Fixed expenses
113,600
Net operating income
$29,200
Required:
Redo the company’s contribution format income statement assuming that the company
sells 3,400 units.
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155.
Buentello Corporation produces and sells a single product. The company’s contribution
format income statement for January appears below:
Sales (1,900 units)
$55,100
Variable expenses
22,800
Contribution margin
32,300
Fixed expenses
24,900
Net operating income
$7,400
Required:
Redo the company’s contribution format income statement assuming that the company
sells 1,600 units.
Sales (1,600 units)
Variable expenses
Contribution margin
Fixed expenses
Net operating income
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156.
The following is Arkadia Corporation’s contribution format income statement for last
month:
Sales
$1,200,000
Variable expenses
800,000
Contribution margin
400,000
Fixed expenses
300,000
Net operating income
$100,000
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?
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157.
The management of Pacubas Corporation expects sales in July to be $121,000. The
company’s contribution margin ratio is 64% and its fixed monthly expenses are $40,000.
Required:
Estimate the company’s net operating income for July, assuming that the fixed monthly
expenses do not change. Show your work!
158.
Bianchini Corporation’s contribution margin ratio is 58% and its fixed monthly expenses
are $94,000. Assume that the company’s sales for May are expected to be $178,000.
Required:
Estimate the company’s net operating income for May, assuming that the fixed monthly
expenses do not change. Show your work!
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159.
Gaskey Inc. expects its sales in February to be $173,000. The company’s contribution
margin ratio is 58% and its fixed monthly expenses are $94,000.
Required:
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160.
Larita Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$190
100%
Variable expenses
38
20%
Contribution margin
$152
80%
Less incremental fixed expenses
Change in net operating income
($640)
Fixed expenses are $243,000 per month. The company is currently selling 2,000 units per
month.
Required:
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161.
Wrobbel Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$150
100%
Variable expenses
90
60%
Contribution margin
$60
40%
New variable cost per unit ($90 per unit + $2 per unit)
New contribution margin per unit ($150 per unit – $92 per unit)
New unit monthly sales (6,000 units + 200 units)
New total contribution margin:
Current total contribution margin:
Change in total contribution margin and in net operating income
Fixed expenses are $307,000 per month. The company is currently selling 6,000 units per
month.
Required:
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