NCSU ACC 220: Chapter 6 Problems

Krawczyk Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.

Sales (9,000 units) $180,000

Variable expenses 117,000

Contribution margin 63,000

Fixed expenses 56,700

Net operating income $6,300

The number of units that must be sold to achieve a target profit of $16,100 is closest to:

Scalise Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.

Sales (9,000 units) $180,000

Variable expenses 117,000

Contribution margin 63,000

Fixed expenses 56,700

Net operating income $6,300

The break-even point in dollar sales is closest to:

Kranitz Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.

Sales (6,000 units) $240,000

Variable expenses 180,000

Contribution margin 60,000

Fixed expenses 54,000

Net operating income $6,000

The number of units that must be sold to achieve a target profit of $24,000 is closest to:

Showalter Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.

Sales (9,000 units) $270,000

Variable expenses 175,500

Contribution margin 94,500

Fixed expenses 86,100

Net operating income $8,400

The break-even point in dollar sales is closest to:

Hancock Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.

Sales (3,000 units) $120,000

Variable expenses 90,000

Contribution margin 30,000

Fixed expenses 21,000

Net operating income $9,000

If sales decline to 2,900 units, the net operating income would be closest to:

Whited Corporation sold 25,000 units of product last year. The contribution margin per unit was $2, and fixed expenses totaled $40,000 for the year. This year fixed expenses are expected to increase to $45,0000, but the contribution margin per unit will remain unchanged at $2. How many units must be sold this year to earn the same net operating income as was earned last year?

The degree of operating leverage is computed by dividing sales by the contribution margin.

Goldman Corporation has sales of 3,000 units at $80 per unit. Variable costs are 35% of the sales. If total fixed cost is $66,000, what is the degree of operating leverage?