89%(71)63 out of 71 people found this document helpful
This preview shows page 3 - 5 out of 34 pages.
23. A $2.00 increase in a product's variable expense per unit accompanied by a $2.00increase in its selling price per unit will:A) decrease the degree of operating leverage.B) decrease the contribution margin.C) have no effect on the break-even volume.D) have no effect on the contribution margin ratio.Answer: C Level: Hard LO: 5,824. The break-even point in unit sales is found by dividing total fixed expenses by:25. Which of the following would not affect the break-even point?26. If a company increases its selling price by $2 per unit due to an increase in its variablelabor cost of $2 per unit, the break-even point in units will:27. To obtain the dollar sales volume necessary to attain a given target profit, which of thefollowing formulas should be used?
A) (Fixed expenses + Target net profit)/Total contribution marginB) (Fixed expenses + Target net profit)/Contribution margin ratioC) Fixed expenses/Contribution margin per unitD) Target net profit/Contribution margin ratioAnswer: B Level: Easy LO: 628. Salinas Corporation has a degree of operating leverage of 8. This means that a 1%change in sales dollars at Salinas will generate an 8% change in:29. In calculating the break-even point for a multi-product company, which of thefollowing assumptions are commonly made?I. Selling prices are constant.II. Variable expenses are constant per unit.III. The sales mix is constant.30. The following information relates to the break-even point at Pezzo Corporation:Sales dollars ......................$120,000Total fixed expenses .........$30,000If Pezzo wants to generate net operating income of $12,000, what will its sales dollarshave to be?31. The following information relates to Snowbird Corporation:Sales at the break-even point .........$312,500Total fixed expenses ......................$250,000Net operating income ....................$150,000What is Snowbird's margin of safety?A) $62,500B) $187,500C) $100,000D) $212,500Answer: B Level: Hard LO: 1,3,5,7