Chapter 05 – Cost-Volume-Profit Relationships
218. Data concerning Maline Corporation’s single product appear below:
Fixed expenses are $55,000 per month. The company is currently selling 1,000 units per
month.
Required:
The marketing manager would like to cut the selling price by $6 and increase the advertising
budget by $2,700 per month. The marketing manager predicts that these two changes would
increase monthly sales by 100 units. What should be the overall effect on the company’s
monthly net operating income of this change? Show your work!
Chapter 05 – Cost-Volume-Profit Relationships
219. Dubitsky Corporation produces and sells a single product. Data concerning that product
appear below:
Fixed expenses are $516,000 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 $9 per unit. In exchange,
the sales staff would accept an overall decrease in their salaries of $55,000 per month. 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? Show your work!
Chapter 05 – Cost-Volume-Profit Relationships
220. Data concerning Tietz Corporation’s single product appear below:
Fixed expenses are $1,044,000 per month. The company is currently selling 9,000 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 $14 per unit. In exchange,
the sales staff would accept an overall decrease in their salaries of $110,000 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!
Chapter 05 – Cost-Volume-Profit Relationships
221. Churchwell Corporation produces and sells a single product. Data concerning that
product appear below:
Required:
a. Assume the company’s monthly target profit is $69,000. Determine the unit sales to attain
that target profit. Show your work!
b. Assume the company’s monthly target profit is $41,400. Determine the dollar sales to attain
that target profit. Show your work!
Chapter 05 – Cost-Volume-Profit Relationships
222. Guagliano Corporation produces and sells a single product whose selling price is
$110.00 per unit and whose variable expense is $29.70 per unit. The company’s monthly fixed
expense is $345,290.
Required:
a. Assume the company’s monthly target profit is $16,060. Determine the unit sales to attain
that target profit. Show your work!
b. Assume the company’s monthly target profit is $40,150. Determine the dollar sales to attain
that target profit. Show your work!
Chapter 05 – Cost-Volume-Profit Relationships
223. Arzola Corporation produces and sells a single product. Data concerning that product
appear below:
Required:
Assume the company’s monthly target profit is $17,080. Determine the unit sales to attain that
target profit. Show your work!
Chapter 05 – Cost-Volume-Profit Relationships
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224. The selling price of Bayard Corporation’s only product is $230.00 per unit and its
variable expense is $80.50 per unit. The company’s monthly fixed expense is $792,350.
Required:
Assume the company’s monthly target profit is $29,900. Determine the unit sales to attain that
target profit. Show your work!
225. Dagnan Corporation produces and sells a single product whose contribution margin ratio
is 66%. The company’s monthly fixed expense is $667,920 and the company’s monthly target
profit is $72,600.
Required:
Determine the dollar sales to attain the company’s target profit. Show your work!
Chapter 05 – Cost-Volume-Profit Relationships
226. The contribution margin ratio of Thronson Corporation’s only product is 69%. The
company’s monthly fixed expense is $455,400 and the company’s monthly target profit is
$41,400.
Required:
Determine the dollar sales to attain the company’s target profit. Show your work!
Chapter 05 – Cost-Volume-Profit Relationships
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227. Penury Company offers two products. At present, the following represents the usual
results of a month’s operations:
Required:
a. Find the break-even point in dollars.
b. Find the margin of safety in dollars.
c. The company is considering decreasing product K’s unit sales to 80,000 and increasing
product L’s unit sales to 180,000, leaving unchanged the selling price per unit, variable
expense per unit, and total fixed expenses. Would you advise adopting this plan?
d. Refer to (c) above. Under the new plan, find the break-even point in dollars.
e. Under the new plan in (c) above, find the margin of safety in dollars.
Chapter 05 – Cost-Volume-Profit Relationships
Chapter 05 – Cost-Volume-Profit Relationships
228. Aziz Corporation produces and sells a single product. Data concerning that product
appear below:
Required:
Determine the monthly break-even in either unit or total dollar sales. Show your work!