5. Minist Corporation sells a single product for $10 per unit. Last year, the co
ID: 2424309 • Letter: 5
Question
5.
Minist Corporation sells a single product for $10 per unit. Last year, the company's sales revenue was $250,000 and its net operating income was $42,000. If fixed expenses totaled $83,000 for the year, the break-even point in unit sales was:
25,000
12,500
29,200
16,600
6.
The Clyde Corporation's variable expenses are 40% of sales. Clyde Corporation is contemplating an advertising campaign that will cost $29,000. If sales increase by $79,000, the company's net operating income will increase by:
$31,600
$18,400
$2,600
$64,800
7.
Steeler Corporation is planning to sell 100,000 units for $2.10 per unit and will break even at this level of sales. Fixed expenses will be $87,000. What are the company's variable expenses per unit?
$0.87
$1.83
$1.23
$0.36
8.
Frank Corporation manufactures a single product that has a selling price of $20.00 per unit. Fixed expenses total $45,000 per year, and the company must sell 4,500 units to break even. If the company has a target profit of $19,000, sales in units must be:
5,991
5,450
6,400
6,750
9.
Puchalla Corporation sells a product for $140 per unit. The product's current sales are 12,500 units and its break-even sales are 11,250 units. The margin of safety as a percentage of sales is closest to:
89%
11%
10%
90%
10.
Kendall Company has sales of 2,375 units at $40 a unit. Variable expenses are 20% of the selling price. If total fixed expenses are $66,000, the degree of operating leverage is:
7.60
1.90
2.07
9.50
Minist Corporation sells a single product for $10 per unit. Last year, the company's sales revenue was $250,000 and its net operating income was $42,000. If fixed expenses totaled $83,000 for the year, the break-even point in unit sales was:
Explanation / Answer
5. No of sunits sold = 250000/10 = 25000
Contribution per unit = (42000 + 83000)/25000
= $5 per unit
Break evn point = FC/contribution per unit
= 83000/5 = 16600 units
6. Increased net operating income = 79000 x 60% - 29000
= 18400
7. Contribution per unit = FC/Break evn point
= 83000/100000 = 0.83
Varaible cost per unit = sales price - Contribution per unit
= 2.10 - 0.83
= 1.23
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