Accounting

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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

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$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

3) Darth Company sells three products. Sales and contribution margin ratios for the three products follow:

 

Product X

Product Y

Product Z

  Sales in dollars

$26,000   

$46,000   

$106,000   

  Contribution margin

ratio

51%  

46%  

21%  

 

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:

 

50%    

Per Unit

Percent of Sales

  Selling price

$170   

100%    

  Variable expenses

85   

50%    

  Contribution margin

$ 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:

  Variable expenses

  Contribution margin

  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

$1,700,000

$220,000

$1,495,000

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