A company produces and sells a single product. Data concerning that product appear below:   Per Unit Selling price $130 Variable expenses $78 Contribution margin $52 The company is currently selling 6,000 units per month. Fixed expenses are $263,000 per month. The marketing manager believes that a $5,000 increase in the monthly advertising budget would result in a 140 unit increase in monthly sales. What should be the overall effect on the company’s monthly net operating income of this change?

A company purchased a machine 5 years ago for $285,000 when it launched product P50. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model XX machine costing $340,000 or by a new model YY machine costing $325,000. Management has decided to buy the model YY machine. It has less capacity than the model XX machine, but its capacity is sufficient to continue making product P50. Management also considered, but rejected, the alternative of dropping product P50 and not replacing the old machine. If that were done, the $325,000 invested in the new machine could instead have been invested in a project that would have returned a total of $310,000.

Commissions paid to a salesperson are indirect product costs.

Which of the following would not be an acceptable way to express contribution margin?

Which of the following statements are true? I.   If the activity level increases, then one would expect the fixed cost per unit to increase as well. II.  A fixed cost is a cost whose cost per unit varies as the activity level rises and falls.  III. A decrease in production will ordinarily result in a decrease in fixed production costs.

A company’s contribution margin ratio is 60% and its fixed monthly expenses are $47,000. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company’s net operating income in a month when sales are $136,000?

At an activity level of 8,000 units in a month, a company’s total variable maintenance and repair cost is $690,180 and its total fixed maintenance and repair cost is $457,000. This level of activity is within the relevant range which is 7,000 units to 10,000 units. What would the total maintenance and repair cost, both fixed and variable, be at an activity level of 8,500 units in a month? (Round intermediate calculations to 2 decimal places.)

A company is a single product firm. They are predicting that a price increase next year will not cause unit sales to decrease. What effect would this price increase have on the following items for next year?   Contribution Margin Ratio      Break-even Point A) Decrease Decrease B) Increase Decrease C) Increase No effect D) Decrease No effect

The smaller the contribution margin ratio, the largerthe amount of sales required to cover a given amount of fixed expenses.

The salary paid to the maintenance foreman in a manufacturing company would be classified as a(n): Conversion cost Period cost Indirect cost Product cost A) Yes No Yes No B) Yes Yes Yes No C) Yes No Yes Yes D) No No No No