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Chapter 06 Instructor Homework &amp; Answers (1)

# Information concerning label corporations operations

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11. Information concerning Label Corporation's operations follow: Sales ................................... \$300,00 0 Variable expenses .............. 240,000 Fixed expenses ................... 40,000 Assuming that Label increased sales by 20%, what should net operating income be? A) \$20,000 B) \$24,000 C) \$32,000 D) \$80,000 12. The Clyde Company's variable expenses are 35% of sales. Clyde Company is contemplating an advertising campaign that will cost \$25,000. If sales increase by \$75,000, the company's net operating income will increase by: 13. Carlton Company sells a single product at a selling price of \$40 per unit. Variable expenses are \$22 per unit and fixed expenses are \$82,800. Carlton's break-even point is:

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Use the following to answer questions 14-15: Gardner Furniture Company produces two kinds of chairs: an oak model and a chestnut wood model. The oak model sells for \$60 and the chestnut wood model sells for \$100. The variable expenses are as follows: Oak Chestnu t Variable production cost per unit .......................... \$30 \$35 Variable selling & admin. expense per unit ........... 6 5 Expected sales in units next year are: 5,000 oak chairs and 1,000 chestnut chairs. Fixed expenses are budgeted at \$135,000 per year.
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