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180. Assume the company’s monthly target profit is $31,000. The dollar sales to attain that
target profit are closest to:
Smotherman Corporation produces and sells a single product. Data concerning that product
appear below:
Chapter 05 – Cost-Volume-Profit Relationships
181. The break-even in monthly unit sales is closest to:
182. The break-even in monthly dollar sales is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
Data concerning Delmore Corporation’s single product appear below:
183. The break-even in monthly unit sales is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
184. The break-even in monthly dollar sales is closest to:
Guillet Inc. produces and sells a single product. The selling price of the product is $180.00
per unit and its variable cost is $46.80 per unit. The fixed expense is $618,048 per month.
185. The break-even in monthly unit sales is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
186. The break-even in monthly dollar sales is closest to:
Hunter Corporation sells a product for $180 per unit. The product’s current sales are 34,900
units and its break-even sales are 25,128 units.
187. What is the margin of safety in dollars?
Chapter 05 – Cost-Volume-Profit Relationships
188. The margin of safety as a percentage of sales is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
189. What is the margin of safety in dollars?
190. The margin of safety as a percentage of sales is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
Toye Corporation has provided its contribution format income statement for March.
191. The degree of operating leverage is closest to:
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192. If the company’s sales increase by 12%, its net operating income should increase by
about:
The February contribution format income statement of Caines Corporation appears below:
Chapter 05 – Cost-Volume-Profit Relationships
193. The degree of operating leverage is closest to:
194. If the company’s sales increase by 18%, its net operating income should increase by
about:
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Henning Corporation produces and sells two models of hair dryers, Standard and Deluxe.
The company has provided the following data relating to these two products:
The company’s total monthly fixed expense is $13,800.
195. The break-even in sales dollars for the expected sales mix is (rounded):
196. If the expected monthly sales in units were divided equally between the two models (900
Standard and 900 Deluxe), the break-even level of sales would be:
Chapter 05 – Cost-Volume-Profit Relationships
Chapter 05 – Cost-Volume-Profit Relationships
Kuhner Corporation produces and sells two products. Data concerning those products for the
most recent month appear below:
Fixed expenses for the entire company were $33,100.
197. The break-even point for the entire company is closest to:
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198. If the sales mix were to shift toward Product B64P with total dollar sales remaining
constant, the overall break-even point for the entire company:
Schlender Corporation produces and sells two products. In the most recent month, Product
L40O had sales of $22,000 and variable expenses of $8,580. Product Y27L had sales of
$49,000 and variable expenses of $17,690. The fixed expenses of the entire company were
$43,950.
Chapter 05 – Cost-Volume-Profit Relationships
199. The break-even point for the entire company is closest to:
Chapter 05 – Cost-Volume-Profit Relationships
200. If the sales mix were to shift toward Product L40O with total dollar sales remaining
constant, the overall break-even point for the entire company:
Chapter 05 – Cost-Volume-Profit Relationships
Essay Questions
201. Candice Corporation has decided to introduce a new product. The product can be
manufactured using either a capital-intensive or labor-intensive method. The manufacturing
method will not affect the quality or sales of the product. The estimated manufacturing costs
of the two methods are as follows:
The company’s market research department has recommended an introductory selling price of
$30 per unit for the new product. The annual fixed selling and administrative expenses of the
new product are $500,000. The variable selling and administrative expenses are $2 per unit
regardless of how the new product is manufactured.
Required:
a. Calculate the break-even point in units if Candice Corporation uses the:
1. capital-intensive manufacturing method.
2. labor-intensive manufacturing method.
b. Determine the unit sales volume at which the net operating income is the same for the two
manufacturing methods.
c. Assuming sales of 250,000 units, what is the degree of operating leverage if the company
uses the:
1. capital-intensive manufacturing method.
2. labor-intensive manufacturing method.
d. What is your recommendation to management concerning which manufacturing method
should be used?
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Chapter 05 – Cost-Volume-Profit Relationships