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BA213_Review.test2

# BA213_Review.test2 - BA213 Review for test 2 Instructor...

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BA213 Review for test # 2 – Instructor: Usha Ramanujam 1. Contribution margin can be defined as: A. the amount of sales revenue necessary to cover variable expenses. B. sales revenue minus fixed expenses. C. the amount of sales revenue necessary to cover fixed and variable expenses. D. sales revenue minus variable expenses. 2. If both the fixed and variable expenses associated with a product decrease, what will be the effect on the contribution margin ratio and the break-even point, respectively? A. B. C. D. 3. The margin of safety can be calculated by: 1

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4. Sorin Inc., a company that produces and sells a single product, has provided its contribution format income statement for January. If the company sells 4,600 units, its total contribution margin should be closest to: 5. Decaprio Inc. produces and sells a single product. The company has provided its contribution format income statement for June. If the company sells 9,200 units, its net operating income should be closest to: 6. Jilk Inc.'s contribution margin ratio is 58% and its fixed monthly expenses are \$36,000. 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 \$103,000? A. \$23,740 B. \$59,740 C. \$67,000 D. \$7,260 2
7. Data concerning Kardas Corporation's single product appear below: The company is currently selling 8,000 units per month. Fixed expenses are \$719,000 per month. The marketing manager believes that a \$20,000 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? 8. Hartl Corporation is a single product firm with the following selling price and cost structure for next year: How many units will Hartl have to sell next year in order to break-even? 3

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9. Data concerning Buchenau Corporation's single product appear below: The break-even in monthly unit sales is closest to:
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