5-266
162.
Data concerning Ulwelling Corporation’s single product appear below:
Per Unit
Percent of Sales
Selling price
$170
100%
Variable expenses
51
30%
Contribution margin
$119
70%
New contribution margin ($119 per unit – $11 per unit)
New unit monthly sales (8,000 units + 300 units)
New total contribution margin:
Present total contribution margin:
Change in total contribution margin
Change in net operating income
Fixed expenses are $753,000 per month. The company is currently selling 8,000 units per
month.
Required:
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 an overall decrease in their salaries of $73,000 per
month. 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? Show your work!
5-267
5-268
163.
Data concerning Kurek Corporation’s single product appear below:
Per Unit
Percent of Sales
Selling price
$180
100%
Variable expenses
126
70%
Contribution margin
$54
30%
Fixed expenses are $190,000 per month. The company is currently selling 4,000 units per
month.
Required:
The marketing manager would like to cut the selling price by $12 and increase the
advertising budget by $11,100 per month. The marketing manager predicts that these two
changes would increase monthly sales by 1,500 units. What should be the overall effect on
the company’s monthly net operating income of this change? Show your work!
New total contribution margin:
Present total contribution margin:
Change in total contribution margin
Less increase in advertising budget
Change in net operating income
5-269
5-270
164.
Moallankamp Corporation produces and sells a single product. Data concerning that
product appear below:
Per Unit
Percent of Sales
Selling price
$230
100%
Variable expenses
46
20%
Contribution margin
$184
80%
New contribution margin ($184 per unit – $20 per unit)
New unit monthly sales (7,000 units + 400 units)
New total contribution margin:
Present total contribution margin:
Change in total contribution margin
Change in net operating income
Fixed expenses are $1,131,000 per month. The company is currently selling 7,000 units
per month.
Required:
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 an overall decrease in their salaries of $117,000
per month. The marketing manager predicts that introducing this sales incentive would
increase monthly sales by 400 units. What should be the overall effect on the company’s
monthly net operating income of this change? Show your work!
5-271
5-272
165.
Grable Corporation produces and sells a single product. Data concerning that product
appear below:
Per Unit
Percent of Sales
Selling price
$230
100%
Variable expenses
69
30%
Contribution margin
$161
70%
New selling price ($230 per unit – $18 per unit)
New contribution margin ($212 per unit – $69 per unit)
New unit monthly sales (5,000 units + 800 units)
New total contribution margin:
Present total contribution margin:
Change in total contribution margin
Less increase in advertising budget
Change in net operating income
Fixed expenses are $628,000 per month. The company is currently selling 5,000 units per
month.
Required:
The marketing manager would like to cut the selling price by $18 and increase the
advertising budget by $45,000 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? Show your work!
5-273
166.
Data concerning Phung Corporation’s single product appear below:
Per Unit
Percent of Sales
Selling price
$230
100%
Variable expenses
92
40%
Contribution margin
$138
60%
Fixed expenses are $991,000 per month. The company is currently selling 8,000 units per
month.
Required:
The marketing manager believes that a $23,000 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? Show your work!
Less incremental fixed expenses
Change in net operating income
5-274
167.
Data concerning Sumter Corporation’s single product appear below:
Per Unit
Percent of Sales
Selling price
$220
100%
Variable expenses
66
30%
Contribution margin
$154
70%
Fixed expenses are $1,024,000 per month. The company is currently selling 8,000 units
per month.
Required:
Management is considering using a new component that would increase the unit variable
cost by $6. Since the new component would improve 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 if fixed
expenses are unaffected? Show your work!
New variable cost per unit ($66 per unit + $6 per unit)
New contribution margin per unit ($220 per unit – $72 per unit)
New unit monthly sales (8,000 units + 300 units)
New total contribution margin:
Current total contribution margin:
Change in total contribution margin and in net operating income
5-275
168.
Pultz Corporation produces and sells a single product. Data concerning that product
appear below:
Selling price per unit
$120.00
Variable expense per unit
$40.80
Fixed expense per month
$249,480
Selling price per unit
Variable expense per unit
Contribution margin per unit and contribution margin ratio
Required:
Determine the monthly break-even in total dollar sales. Show your work!
5-276
169.
Shauer, Inc., produces and sells a single product whose selling price is $150.00 per unit
and whose variable expense is $33.00 per unit. The company’s fixed expense is $436,410
per month.
Required:
Determine the monthly break-even in either unit or total dollar sales. Show your work!
5-277
170.
Torbert, Inc., produces and sells a single product. The product sells for $190.00 per unit
and its variable expense is $72.20 per unit. The company’s monthly fixed expense is
$353,400.
Required:
Determine the monthly break-even in unit sales. Show your work!
5-278
171.
Buccheri Corporation produces and sells a single product. Data concerning that product
appear below:
Selling price per unit
$210.00
Variable expense per unit
$77.70
Fixed expense per month
$293,706
Required:
Determine the monthly break-even in unit sales. Show your work!
Selling price per unit
Variable expense per unit
Contribution margin per unit
5-279
172.
Maddaloni International, Inc., produces and sells a single product. The product sells for
$160.00 per unit and its variable expense is $46.40 per unit. The company’s monthly fixed
expense is $219,248.
Required:
Determine the monthly break-even in total dollar sales. Show your work!
5-280
173.
Hirz Corporation produces and sells a single product. Data concerning that product appear
below:
Selling price per unit
$190.00
Variable expense per unit
$89.30
Fixed expense per month
$102,714
Selling price per unit
Variable expense per unit
Contribution margin per unit and contribution margin ratio
Required:
Determine the monthly break-even in either unit or total dollar sales. Show your work!
5-281
174.
The contribution margin ratio of Donath Corporation’s only product is 65%. The company’s
monthly fixed expense is $573,300 and the company’s monthly target profit is $9,100.
Required:
Determine the dollar sales to attain the company’s target profit. Show your work!