Question : 31. Joe’s Coffee HouseJoe’s Coffee House has the following information available : 1291714

 

31. Joe’s Coffee HouseJoe’s Coffee House has the following information available for the month of July: 

Sales (2,500 cups)

$7,500

Variable costs

3,250

Fixed costs

  4,000

Net operating income

$   250

 

 

Refer to the Joe’s Coffee House information above. All else being equal, if Joe’s increases the sales price per unit by 10%, net operating income will: A. increase by $425.B. increase by $750.C. increase by $75.D. not change.

 

32. Jazz Products has the following information available for the month of March: 

Sales (5,000 units)

$100,000

Variable costs

45,000

Fixed costs

    15,000

Net operating income

$40,000

 

 

The company’s manager is considering several options to increase net operating income. By what amount do sales dollars need to increase in order for net operating income to increase to $62,000? A. $40,000B. $62,000C. $162,000D. $38,000

 

33. If sales revenue stays the same but the contribution margin ratio decreases, then: A. net operating income will increase.B. fixed costs will decrease.C. net operating income will decrease.D. fixed costs will increase.

 

34. Which of the following statements is true when making decisions using cost-volume-profit (CVP) analysis? A. As long as the contribution margin is a positive number, net operating income will be positive.B. As long as variable costs are more than fixed costs, net operating income will be negative.C. As long as the contribution margin is greater than fixed costs, net operating income will be positive.D. As long as the sales price per unit is greater than fixed costs per unit, net operating income will be positive.

 

35. Haywood Inc. has the following information available for one of its products: 

Sales price per unit

$35

Contribution margin ratio

65%

Total fixed costs

$10,000

Units produced and sold

5,000

 

 

In Haywood sells one more unit, net operating income will: A. increase by $20.75.B. increase by $12.25.C. increase by $22.75.D. increase by $35.

 

36. Laverne’s Soda Shop wishes to decrease variable costs. Which of the following options should she consider? A. Decrease in advertising costsB. Decrease in rentC. Decrease in direct labor costsD. Increase in equipment rentals

 

37. Last year, Brown Manufacturing had a contribution margin ratio of 40%. This year, fixed expenses are expected to remain at $50,000 and sales are expected to increase by $90,000. What should the contribution margin ratio be this year if the company wishes to increase net operating income by $31,500? A. 78.75%B. 40.00%C. 35.00%D. 55.56%

 

38. Stealth Software Inc.Stealth Software Inc. has the following information available from last year for one of its software products: 

Sales revenue

$50,000

Variable costs

15,000

Fixed costs

    10,000

Net operating income

$25,000

 

 

Refer to the Stealth Software Inc. information above. If the software had a sales price of $20 per unit, what is the variable cost per unit? A. $ 20B. $ 14C. $ 10D. $ 6

 

39. Stealth Software Inc.Stealth Software Inc. has the following information available from last year for one of its software products: 

Sales revenue

$50,000

Variable costs

15,000

Fixed costs

    10,000

Net operating income

$25,000

 

 

Refer to the Stealth Software Inc. information above. If the software had a sales price of $20 per unit, what is the contribution margin per unit? A. $10B. $6C. $14D. $20

 

40. Stealth Software Inc.Stealth Software Inc. has the following information available from last year for one of its software products: 

Sales revenue

$50,000

Variable costs

15,000

Fixed costs

    10,000

Net operating income

$25,000

 

 

Refer to the Stealth Software Inc. information above. If the sales price per unit is $20 and the company expects a 25% increase in sales volume this year along with a 10% decrease in fixed costs. What will be expected net operating income this year? A. $22,250B. $53,500C. $32,750D. $34,750