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The company is considering the use of higher quality

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11.The company is considering the use of higher quality direct materials, which would increase directmaterial cost from $6 per unit to $8 per unit. If this change were made without changing the sellingprice, it is believed that unit sales would increase by 10%. If this occurred, net operating incomewould be:a.$100,000.b.$210,000.c.$170,000.d.$140,000.
Use the following information for the next TWO questions:The following information relates to FCG Company:Degree of operating leverageMargin of safety$25,000Margin of safety percentage25%Contribution margin ratio40%12.If FCG’s sales increase by10%, by what percentage will its net operating income increase?4
13.FCG wants to give its only salesman a $3,000 salary increase. If FCG gives this increase, by howmuch would sales at FCG have to increase in order for the company to maintain its current netoperating income level?
14.What term is used to describe the amount of sales above the break-even point?
15.Cost-volume-profit analysis assumes that:a.total fixed costs remain constant.b.selling prices must increase in order to generate more revenue.c.variable costs per unit must decrease in order to generate more profit.d.Exactly two of the above are correct.
16.XPA Inc. sells a single product for $22 per unit. Variable costs are $10 per unit, and the fixed costsare $30,000 per year. XPA expects to sell 12,000 units in 2018. The profit for each unit sold above thebreakeven point is:
17.Gustavo Inc. has a breakeven point of 20,000 units. The selling price is $20 per unit and total fixedcosts are $180,000. In 2018 when Gustavo sold 25,000 units, total variable costs were:
18.Which of the following would cause break-even point in units to decrease?
Practice Exam 2B - Page 4 of 9

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Term
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Contribution Margin, Cost Volume Profit graph

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