Chapter 05 – Cost-Volume-Profit Relationships
62. Data concerning Moscowitz Corporation’s single product appear below:
Fixed expenses are $375,000 per month. The company is currently selling 8,000 units per
month. The marketing manager would like to cut the selling price by $15 and increase the
advertising budget by $23,000 per month. The marketing manager predicts that these two
changes would increase monthly sales by 3,100 units. What should be the overall effect on the
company’s monthly net operating income of this change?
Chapter 05 – Cost-Volume-Profit Relationships
63. Montgomery Corporation produces and sells a single product. Data concerning that
product appear below:
Fixed expenses are $239,000 per month. The company is currently selling 3,000 units per
month. The marketing manager would like to cut the selling price by $12 and increase the
advertising budget by $12,000 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?
Chapter 05 – Cost-Volume-Profit Relationships
64. Data concerning Knipp Corporation’s single product appear below:
Fixed expenses are $587,000 per month. The company is currently selling 4,000 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 $16 per unit. In
exchange, the sales staff would accept a decrease in their salaries of $57,000 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?
Chapter 05 – Cost-Volume-Profit Relationships
65. Mowrer Corporation produces and sells a single product. Data concerning that product
appear below:
Fixed expenses are $567,000 per month. The company is currently selling 9,000 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 $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?
Chapter 05 – Cost-Volume-Profit Relationships
66. Hirt Corporation sells its product for $12 per unit. Next year, fixed expenses are expected
to be $400,000 and variable expenses are expected to be $8 per unit. How many units must
the company sell to generate net operating income of $80,000?
Chapter 05 – Cost-Volume-Profit Relationships
67. A total of 30,000 units were sold last year. The contribution margin per unit was $2, and
fixed expenses totaled $20,000 for the year. This year fixed expenses are expected to increase
to $26,000, but the contribution margin per unit will remain unchanged at $2. How many
units must be sold this year to earn the same profit as was earned last year?
Chapter 05 – Cost-Volume-Profit Relationships
68. A product sells for $20 per unit and has a contribution margin ratio of 40 percent. Fixed
expenses total $240,000 annually. How many units of the product must be sold to yield a
profit of $60,000?
Chapter 05 – Cost-Volume-Profit Relationships
69. Last year, Flynn Company reported a profit of $70,000 when sales totaled $520,000 and
the contribution margin ratio was 40%. If fixed expenses increase by $10,000 next year, what
amount of sales will be necessary in order for the company to earn a profit of $80,000?
Chapter 05 – Cost-Volume-Profit Relationships
70. Perona Corporation produces and sells a single product. Data concerning that product
appear below:
The unit sales to attain the company’s monthly target profit of $9,000 is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
71. Data concerning Hewell Enterprises Corporation’s single product appear below:
The unit sales to attain the company’s monthly target profit of $14,000 is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
72. Lone International Corporation’s only product sells for $230.00 per unit and its variable
expense is $80.50. The company’s monthly fixed expense is $822,250 per month. The unit
sales to attain the company’s monthly target profit of $33,000 is closest to:
73. Hassick Corporation produces and sells a single product whose contribution margin ratio
is 63%. The company’s monthly fixed expense is $460,530 and the company’s monthly target
profit is $19,000. The dollar sales to attain that target profit is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
74. The contribution margin ratio of Lime Corporation’s only product is 75%. The company’s
monthly fixed expense is $688,500 and the company’s monthly target profit is $20,000. The
dollar sales to attain that target profit is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
75. The following is last month’s contribution format income statement:
What is the company’s margin of safety percentage to the nearest whole percent?
Chapter 05 – Cost-Volume-Profit Relationships
76. The following monthly data are available for the Eager Company and its only product:
The margin of safety for the company for March was:
Chapter 05 – Cost-Volume-Profit Relationships
77. Last year, Farrer Corporation had sales of $1,500,000, variable expenses of $900,000, and
fixed expenses of $400,000. What would be the dollar sales at the break-even point?
78. Smith Company sells a single product at a selling price of $30 per unit. Variable expenses
are $12 per unit and fixed expenses are $41,400. Smith’s break-even point is:
Chapter 05 – Cost-Volume-Profit Relationships
79. The following data pertain to last month’s operations:
The break-even point in dollars is:
Chapter 05 – Cost-Volume-Profit Relationships
80. Rider Company sells a single product. The product has a selling price of $40 per unit and
variable expenses of $15 per unit. The company’s fixed expenses total $30,000 per year. The
company’s break-even point in terms of total dollar sales is:
Chapter 05 – Cost-Volume-Profit Relationships
81. The following is last month’s contribution format income statement:
What is the company’s break-even in sales dollars?
Chapter 05 – Cost-Volume-Profit Relationships
82. Rave Corporation produces and sells a single product. Data concerning that product
appear below:
The break-even in monthly unit sales is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
83. Data concerning Odum Corporation’s single product appear below:
The break-even in monthly unit sales is closest to:
84. Moncrief Inc. produces and sells a single product. The selling price of the product is
$170.00 per unit and its variable cost is $62.90 per unit. The fixed expense is $300,951 per
month. The break-even in monthly unit sales is closest to: