Accounting

1) The contribution margin ratio is 25% for Grain Company and the break-even point in sales is $196,800. To obtain a target net operating income of $78,000, sales would have to be: (Do not round intermediate calculations.)

$285,000

$508,800

$274,800

$217,200

2) Rothe Company manufactures and sells a single product that it sells for $80 per unit and has a contribution margin ratio of 40%. The company’s fixed expenses are $46,400. If Rothe desires a monthly target net operating income equal to 20% of sales, the amount of sales in units will have to be: (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.)

1,786 units

2,900 units

1,340 units

3,767 units

Given these data, the contribution margin ratio for the company as a whole would be: (Round your intermediate calculations to 2 decimal places. Round your answer to whole percentage.)

32%

49%

39%

it is impossible to determine from the data given.

4) Cindy, Inc. sells a product for $10 per unit. The variable expenses are $5 per unit, and the fixed expenses total $30,100 per period. By how much will net operating income change if sales are expected to increase by $43,000?

$21,500 increase

$40,850 increase

$8,600 decrease

$12,900 increase

5) Pool Company’s variable expenses are 27% of sales. Pool is contemplating an advertising campaign that will cost $19,100. If sales increase by $79,100, the company’s net operating income should increase by: (Do not round intermediate calculations.)

$38,643

$71,686

$21,357

$10,123

6) Data concerning Runnells Corporation’s single product appear below:

Per Unit

Percent of Sales

  Selling price

$170   

100%    

  Variable expenses

85   

50%    

$ 85   

The company is currently selling 5,100 units per month. Fixed expenses are $376,400 per month. The marketing manager believes that a $6,100 increase in the monthly advertising budget would result in a 180 unit increase in monthly sales. What should be the overall effect on the company’s monthly net operating income of this change would be closest to a(an):

Increase of $9,200

Increase of $15,300

Decrease of $9,200

Decrease of $6,100

7) Last year, Flynn Company reported a profit of $74,000 when sales totaled $524,000 and the contribution margin ratio was 40%. If fixed expenses increase by $10,400 next year, what amount of sales will be necessary in order for the company to earn a profit of $84,000? (Do not round intermediate calculations.)

$568,700

$575,000

$608,000

$634,600

8) The following is last month’s contribution format income statement:

  Sales (25,000 units)

$1,700,000

1,275,000  

425,000  

  Fixed expenses

220,000  

  Net operating income

$   205,000  

What is the company’s break-even in sales dollars? (Do not round intermediate calculations.)

$880,000

$220,000

$1,495,000