Question

5). Cincinnati Supply Corp., a supplier to Kraft Foods, sells a single product at a selling price of $40 per unit. Variable expenses are $22 per unit and fixed expenses are $82,800. The company's break-even point is:

a).4,600 units b).3,764 units c). 2,070 units d). 5,000 units

6).Cincinnati Supply Corp., a supplier to Kraft Foods, produces and sells a single product. The company has provided its contribution format income statement for February.

                                               Q5,600 units

Sales                                        $358,400

Variable expense              229,600

Contribution margin     $ 128,800

Fixed expense                       108,400

Net operating income $   20,400

If the company sells 5,700 units, its net operating income should be closest to:

a). $20,400 b).$20,764 c). $26,800 d).$22,700

7).

Data concerning Cincinnati Supply Corp.'s, a supplier to Kraft Foods, single product appear below:

         Per unit

Selling price                                        $140

Variable expense                                   28

Contribution Margin                     $112

Fixed expenses are $720,000 per month. The company is currently selling 8,000 units per month. The marketing manager would like to introduce sales commissions as an incentive for the sales staff. The marketing manager has proposed a commission of $9 per unit. In exchange, the sales staff would accept a decrease in their salaries of $60,000 per month. (This is the company's savings for the entire sales staff.) The marketing manager predicts that introducing this sales incentive would increase monthly sales by 100 units. What should be the overall effect on the company's monthly net operating income of this change?

a).decrease of $121,700 b). increase of $894,300 c). decrease of $1,700 d). increase of $59,100

8).Cincinnati Supply Corp., a supplier to Kraft Foods, produces and sells a single product, has provided its contribution format income statement for January.

                                               Q2,900 units

Sales                                        $226,200

Variable expense                 95,700

Contribution margin     $ 130,500

Fixed expense                       95,600

Net operating income    $ 34,900

If the company sells 2,600 units, its total contribution margin should be closest to:

a).$107,100 b). $31,290 c). $130,500 d). $117,000

Answer 1

SOLUTION

Question 5

Option A is correct, i.e. 4,600 units

Contribution margin per unit = Selling price per unit - Variable cost per unit

= $40 - $22 = $18

Break even point = Fixed expenses / Contribution margin per unit

= $82,800 / $18

= 4,600 units

** All the questions provided are independent to each other, so as per HomeworkLib guidelines I have answered first question.