168) A manufacturer of cedar shingles has supplied the following data:
Bundles of cedar shakes produced and sold
360,000
Sales revenue
$
2,412,000
Variable manufacturing expense
$
1,170,000
Fixed manufacturing expense
$
714,000
Variable selling and administrative expense
$
414,000
Fixed selling and administrative expense
$
82,000
Net operating income
$
32,000
The company’s contribution margin ratio is closest to:
A) 72.6%
B) 65.7%
C) 34.3%
D) 27.4%
169) A manufacturer of cedar shingles has supplied the following data:
Bundles of cedar shakes produced and sold
360,000
Sales revenue
$
2,412,000
Variable manufacturing expense
$
1,170,000
Fixed manufacturing expense
$
714,000
Variable selling and administrative expense
$
414,000
Fixed selling and administrative expense
$
82,000
Net operating income
$
32,000
The company’s degree of operating leverage is closest to:
A) 11.25
B) 25.88
C) 1.99
D) 75.38
170) A manufacturer of tiling grout has supplied the following data:
Kilograms produced and sold
380,000
Sales revenue
$
2,736,000
Variable manufacturing expense
$
1,349,000
Fixed manufacturing expense
$
336,000
Variable selling and administrative expense
$
399,000
Fixed selling and administrative expense
$
372,000
Net operating income
$
280,000
The company’s break-even in unit sales is closest to:
A) 272,308
B) 98,333
C) 92,055
D) 60,488
171) A manufacturer of tiling grout has supplied the following data:
Kilograms produced and sold
380,000
Sales revenue
$
2,736,000
Variable manufacturing expense
$
1,349,000
Fixed manufacturing expense
$
336,000
Variable selling and administrative expense
$
399,000
Fixed selling and administrative expense
$
372,000
Net operating income
$
280,000
The company’s contribution margin ratio is closest to:
A) 28.9%
B) 63.9%
C) 71.1%
D) 36.1%
172) A manufacturer of tiling grout has supplied the following data:
Kilograms produced and sold
380,000
Sales revenue
$
2,736,000
Variable manufacturing expense
$
1,349,000
Fixed manufacturing expense
$
336,000
Variable selling and administrative expense
$
399,000
Fixed selling and administrative expense
$
372,000
Net operating income
$
280,000
The company’s degree of operating leverage is closest to:
A) 9.77
B) 1.36
C) 3.53
D) 2.47
173) Houpe Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$
140
%
Variable expenses
42
%
Contribution margin
$
98
%
Fixed expenses are $490,000 per month. The company is currently selling 6,000 units per month.
The marketing manager believes that a $14,000 increase in the monthly advertising budget
would result in a 150 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 $700
B) increase of $14,700
C) decrease of $14,000
D) decrease of $700
Unit sales (150 unit increase)
6,000 units
6,150 units
Sales (at $140 per unit)
$
840,000
$
861,000
Variable expenses (at $42 per unit)
Contribution margin
588,000
602,700
Fixed expenses ($14,000 increase)
490,000
504,000
Net operating income
$
98,000
$
98,700
174) Houpe Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$
140
%
Variable expenses
42
%
Contribution margin
$
98
%
Fixed expenses are $490,000 per month. The company is currently selling 6,000 units per month.
Management is considering using a new component that would increase the unit variable cost by
$5. Since the new component would increase the features of the company’s product, the
marketing manager predicts that monthly sales would increase by 300 units. What should be the
overall effect on the company’s monthly net operating income of this change?
A) decrease of $2,100
B) decrease of $27,900
C) increase of $2,100
D) increase of $27,900
Unit sales (increase of 300 units)
6,000 units
6,300 units
Sales (at $140 per unit)
per unit)
252,000
296,100
Contribution margin
588,000
585,900
Fixed expenses
490,000
490,000
Net operating income
$
98,000
$
95,900
175) Houpe Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$
140
%
Variable expenses
42
%
Contribution margin
$
98
%
Fixed expenses are $490,000 per month. The company is currently selling 6,000 units per month.
The marketing manager would like to cut the selling price by $7 and increase the advertising
budget by $28,000 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 $17,500
B) increase of $17,500
C) decrease of $24,500
D) increase of $38,500
Unit sales (increase by 500 units)
6,000 units
6,500 units
Sales (at $140 per unit and $133 per unit)
Variable expenses (at $42 per unit)
252,000
273,000
Contribution margin
588,000
591,500
Fixed expenses (increase by $28,000)
490,000
518,000
Net operating income
$
98,000
$
73,500
176) Houpe Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$
140
%
Variable expenses
42
%
Contribution margin
$
98
%
Fixed expenses are $490,000 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 $11 per unit. In exchange, the sales
staff would accept a decrease in their salaries of $58,000 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?
A) increase of $700
B) increase of $56,900
C) decrease of $115,300
D) increase of $588,700
Unit sales (increase by 100 units)
6,000 units
6,100 units
Sales (at $140 per unit)
$
840,000
$
854,000
per unit)
252,000
323,300
Contribution margin
588,000
530,700
Fixed expenses (decrease by $58,000)
490,000
432,000
Net operating income
$
98,000
$
98,700
177) Data concerning Lemelin Corporation’s single product appear below:
Per Unit
Percent of Sales
Selling price
$
230
%
Variable expenses
115
%
Contribution margin
$
115
%
The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month.
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 200 units. What should be the
overall effect on the company’s monthly net operating income of this change?
A) decrease of $22,400
B) decrease of $1,400
C) increase of $22,400
D) increase of $1,400
Unit sales (increase of 200 units)
7,000 units
7,200 units
Sales (at $230 per unit)
$
$
1,656,000
Contribution margin
Fixed expenses
Net operating income
$
$
178) Data concerning Lemelin Corporation’s single product appear below:
Per Unit
Percent of Sales
Selling price
$
230
%
Variable expenses
115
%
Contribution margin
$
115
%
The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month.
The marketing manager believes that an $11,000 increase in the monthly advertising budget
would result in a 100 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 $11,000
B) increase of $11,500
C) decrease of $500
D) increase of $500
Unit sales (100 unit increase)
7,000 units
7,100 units
Sales (at $230 per unit)
$
$
1,633,000
Variable expenses (at $115 per unit)
Contribution margin
Fixed expenses ($11,000 increase)
Net operating income
$
$
179) Data concerning Lemelin Corporation’s single product appear below:
Per Unit
Percent of Sales
Selling price
$
230
%
Variable expenses
115
%
Contribution margin
$
115
%
The company is currently selling 7,000 units per month. Fixed expenses are $581,000 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 $20 per unit. In exchange, the sales
staff would accept a decrease in their salaries of $113,000 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 300 units. What should be the overall effect on the
company’s monthly net operating income of this change?
A) decrease of $224,500
B) increase of $107,000
C) increase of $1,500
D) increase of $806,500
Unit sales (increase by 300 units)
Sales (at $230 per unit)
$
$
1,679,000
and $135 per unit)
Contribution margin
Fixed expenses (decrease by $113,000)
Net operating income
$
$
180) Data concerning Lemelin Corporation’s single product appear below:
Per Unit
Percent of Sales
Selling price
$
230
%
Variable expenses
115
%
Contribution margin
$
115
%
The company is currently selling 7,000 units per month. Fixed expenses are $581,000 per month.
The marketing manager would like to cut the selling price by $18 and increase the advertising
budget by $37,000 per month. The marketing manager predicts that these two changes would
increase monthly sales by 1,600 units. What should be the overall effect on the company’s
monthly net operating income of this change?
A) increase of $118,200
B) increase of $302,200
C) decrease of $118,200
D) decrease of $7,800
Unit sales (increase by 1,600 units)
7,000 units
8,600 units
unit)
$
1,610,000
$
1,823,200
Variable expenses (at $115 per unit)
Contribution margin
Fixed expenses (increase by $37,000)
Net operating income
$
$
181) Thornbrough Corporation produces and sells a single product with the following
characteristics:
Per Unit
Percent of Sales
Selling price
$
220
%
Variable expenses
44
%
Contribution margin
$
176
%
The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month.
Management is considering using a new component that would increase the unit variable cost by
$11. 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) increase of $82,500
B) decrease of $5,500
C) decrease of $82,500
D) increase of $5,500
Unit sales (increase of 500 units)
7,000 units
7,500 units
Sales (at $220 per unit)
$55 per unit)
Contribution margin
1,232,000
1,237,500
Fixed expenses
Net operating income
$
$
182) Thornbrough Corporation produces and sells a single product with the following
characteristics:
Per Unit
Percent of Sales
Selling price
$
220
%
Variable expenses
44
%
Contribution margin
$
176
%
The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month.
The marketing manager believes that a $28,000 increase in the monthly advertising budget
would result in a 190 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 $28,000
B) increase of $33,440
C) increase of $5,440
D) decrease of $5,440
Unit sales (increase of 190 units)
7,000 units
7,190 units
Sales (at $220 per unit)
$
1,540,000
$
1,581,800
Variable expenses (at $44 per unit)
Contribution margin
1,232,000
1,265,440
Fixed expenses ($28,000 increase)
Net operating income
$
$
183) Thornbrough Corporation produces and sells a single product with the following
characteristics:
Per Unit
Percent of Sales
Selling price
$
220
%
Variable expenses
44
%
Contribution margin
$
176
%
The company is currently selling 7,000 units per month. Fixed expenses are $901,000 per month.
The marketing manager would like to cut the selling price by $18 and increase the advertising
budget by $53,000 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?
A) decrease of $105,000
B) increase of $149,000
C) increase of $105,000
D) decrease of $21,000
Unit sales (increase by 1,000 units)
7,000 units
8,000 units
$
1,540,000
$
1,616,000
Variable expenses (at $44 per unit)
Contribution margin
1,232,000
1,264,000
Fixed expenses (increase by $53,000)
Net operating income
$
$
184) Thornbrough Corporation produces and sells a single product with the following
characteristics:
Per Unit
Percent of Sales
Selling price
$
220
%
Variable expenses
44
%
Contribution margin
$
176
%
The company is currently selling 7,000 units per month. Fixed expenses are $901,000 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 $65,000 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 300 units. What should be the overall effect on the
company’s monthly net operating income of this change?
A) increase of $1,269,500
B) increase of $37,500
C) increase of $61,700
D) decrease of $92,500
Unit sales (increase by 300 units)
7,000 units
7,300 units
Sales (at $220 per unit)
$
1,540,000
$
1,606,000
$55 per unit)
Contribution margin
1,232,000
1,204,500
Fixed expenses (decrease by $65,000)
Net operating income
$
$
185) Heathman Inc. produces and sells a single product. The selling price of the product is
$230.00 per unit and its variable cost is $89.70 per unit. The fixed expense is $308,660 per
month.
The break-even in monthly unit sales is closest to:
A) 2,328 units
B) 1,342 units
C) 3,441 units
D) 2,200 units
186) Heathman Inc. produces and sells a single product. The selling price of the product is
$230.00 per unit and its variable cost is $89.70 per unit. The fixed expense is $308,660 per
month.
The break-even in monthly dollar sales is closest to:
A) $791,436
B) $535,365
C) $506,000
D) $308,660
187) Data concerning Sinisi Corporation’s single product appear below:
Selling price per unit
$
200.00
Variable expense per unit
$
58.00
Fixed expense per month
$
407,540
The break-even in monthly unit sales is closest to:
A) 2,038 units
B) 7,027 units
C) 2,870 units
D) 3,978 units