Quiz 2 Practice.docx - Quiz 2 Version 1 MULTIPLE CHOICE...

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Quiz 2 Version 1 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Rovinsky Corporation, a company that produces and sells a single product, has provided its contribution format income statement for November. Sales (5,700 units) $ 319,200 Variable expenses 188,100 Contribution margin 131,100 Fixed expenses 106,500 Net operating income $ 24,600 If the company sells 5,300 units, its net operating income should be closest to: A) $24,600 B) $15,400 C) $2,200 D) $22,874 2) Kelchner Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (3,000 units) $ 180,000 Variable expenses 108,000 Contribution margin 72,000 Fixed expenses 62,400 Net operating income $ 9,600 The contribution margin ratio is closest to: A) 67% B) 33% C) 60% D) 40%
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3) Thomason Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (1,000 units) $ 40,000 Variable expenses 30,000 Contribution margin 10,000 Fixed expenses 7,000 Net operating income $ 3,000 If the variable cost per unit increases by $1, spending on advertising increases by $2,000, and unit sales increase by 50 units, the net operating income would be closest to: A) $450 B) $9,450 C) $1,000 D) $2,150 4) Ploeger Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. Sales (4,000 units) $ 240,000 Variable expenses 156,000 Contribution margin 84,000 Fixed expenses 81,900 Net operating income $ 2,100 The break-even point in dollar sales is closest to: A) $0 B) $156,000 C) $237,900 D) $234,000 5) Creswell Corporation's fixed monthly expenses are $29,000 and its contribution margin ratio is 56%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $95,000? A) $12,800 B) $53,200 C) $24,200 D) $66,000 6) Awtis Corporation has a margin of safety percentage of 20% based on its actual sales. The break-even point is $500,000 and the variable expenses are 60% of sales. Given this information, the actual profit is: A) $55,000 B) $41,500 C) $65,000 D) $50,000 7) Iverson Corporation's variable expenses are 60% of sales. At a $400,000 sales level, the degree of operating
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leverage is 5. If sales increase by $40,000, the new degree of operating leverage will be (rounded): A) 5.25 B) 5.00 C) 2.86 D) 3.67 8) Data concerning Dorazio Corporation's single product appear below: Per Unit Percent of Sales Selling price $ 160 100 % Variable expenses 48 30 % Contribution margin $ 112 70 % Fixed expenses are $87,000 per month. The company is currently selling 1,000 units per month. Management is considering using a new component that would increase the unit variable cost by $28. 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?
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  • Spring '08
  • Hansen

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