Chapter 05 – Cost-Volume-Profit Relationships
158. If sales decrease by 500 units by next month, by how much would fixed expenses have to
be reduced to maintain the current net operating income?
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159. The company has an opportunity to secure a special order of 800 units if it is willing to
drop the selling price on these units to $13. Costs of securing the special order would be
$1,000. The special order would not affect the company’s regular sales. If the special order is
accepted, the company’s overall net operating income will:
Robledo Corporation produces and sells a single product. Data concerning that product
appear below:
Fixed expenses are $625,000 per month. The company is currently selling 9,000 units per
month. Consider each of the following questions independently.
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160. This question is to be considered independently of all other questions relating to Robledo
Corporation. Refer to the original data when answering this question.
The marketing manager believes that a $7,000 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?
161. This question is to be considered independently of all other questions relating to Robledo
Corporation. Refer to the original data when answering this question.
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 400 units. What should be
the overall effect on the company’s monthly net operating income of this change?
Chapter 05 – Cost-Volume-Profit Relationships
162. This question is to be considered independently of all other questions relating to Robledo
Corporation. Refer to the original data when answering this question.
The marketing manager would like to cut the selling price by $6 and increase the advertising
budget by $46,000 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?
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163. This question is to be considered independently of all other questions relating to Robledo
Corporation. Refer to the original data when answering this question.
The marketing manager would like to introduce sales commissions as an incentive for the
sales staff. The marketing manager has proposed a commission of $8 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?
Data concerning Homme Corporation’s single product appear below:
The company is currently selling 2,000 units per month. Fixed expenses are $130,000 per
month. Consider each of the following questions independently.
Chapter 05 – Cost-Volume-Profit Relationships
164. This question is to be considered independently of all other questions relating to Homme
Corporation. Refer to the original data when answering this question.
Management is considering using a new component that would increase the unit variable cost
by $16. 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?
Chapter 05 – Cost-Volume-Profit Relationships
165. This question is to be considered independently of all other questions relating to Homme
Corporation. Refer to the original data when answering this question.
The marketing manager believes that a $12,000 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?
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166. This question is to be considered independently of all other questions relating to Homme
Corporation. Refer to the original data when answering this question.
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 a decrease in their salaries of $24,000 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?
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167. This question is to be considered independently of all other questions relating to Homme
Corporation. Refer to the original data when answering this question.
The marketing manager would like to cut the selling price by $18 and increase the advertising
budget by $8,000 per month. The marketing manager predicts that these two changes would
increase monthly sales by 700 units. What should be the overall effect on the company’s
monthly net operating income of this change?
Laro Corporation produces and sells a single product with the following characteristics:
The company is currently selling 5,000 units per month. Fixed expenses are $302,000 per
month. Consider each of the following questions independently.
168. This question is to be considered independently of all other questions relating to Laro
Corporation. Refer to the original data when answering this question.
Management is considering using a new component that would increase the unit variable cost
by $7. 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?
Chapter 05 – Cost-Volume-Profit Relationships
169. This question is to be considered independently of all other questions relating to Laro
Corporation. Refer to the original data when answering this question.
The marketing manager believes that a $7,000 increase in the monthly advertising budget
would result in a 110 unit increase in monthly sales. What should be the overall effect on the
company’s monthly net operating income of this change?
Chapter 05 – Cost-Volume-Profit Relationships
170. This question is to be considered independently of all other questions relating to Laro
Corporation. Refer to the original data when answering this question.
The marketing manager would like to cut the selling price by $13 and increase the advertising
budget by $17,000 per month. The marketing manager predicts that these two changes would
increase monthly sales by 1,200 units. What should be the overall effect on the company’s
monthly net operating income of this change?
Chapter 05 – Cost-Volume-Profit Relationships
171. This question is to be considered independently of all other questions relating to Laro
Corporation. Refer to the original data when answering this question.
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 a decrease in their salaries of $40,000 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
Budget data for the Bidwell Company are as follows:
172. Bidwell’s break-even sales in units is:
Chapter 05 – Cost-Volume-Profit Relationships
173. The number of units Bidwell would have to sell to earn a net operating income of
$150,000 is:
174. If fixed expenses increased $31,500, the break-even sales in units would be:
Chapter 05 – Cost-Volume-Profit Relationships
Frymire Corporation produces and sells a single product. Data concerning that product
appear below:
175. The unit sales to attain that the target profit of $36,000 is closest to:
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176. Assume the company’s monthly target profit is $46,000. The dollar sales to attain that
target profit is closest to:
Data concerning Celenza Corporation’s single product appear below:
Chapter 05 – Cost-Volume-Profit Relationships
177. Assume the company’s monthly target profit is $25,000. The unit sales to attain that
target profit are closest to:
178. Assume the company’s monthly target profit is $18,000. The dollar sales to attain that
target profit are closest to:
Chapter 05 – Cost-Volume-Profit Relationships
Scheidel Enterprises, Inc. produces and sells a single product whose selling price is $190.00
per unit and whose variable expense is $81.70 per unit. The company’s monthly fixed expense
is $682,290.
179. Assume the company’s monthly target profit is $21,000. The unit sales to attain that
target profit are closest to: