Chapter 13 MC

Chapter 13 MC - CHAPTER THIRTEEN Multiple Choice Questions...

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CHAPTER THIRTEEN Multiple Choice Questions 13-1. The sales break-even point is defined as: a. the level of sales that a firm must reach to cover fixed costs b. the level of income that a firm must reach to cover variable costs c. the level of sales that a firm must reach to cover operating costs d. the point where operating income equals fixed costs 13-2. Firms with high fixed operating costs: a. tend to have low variable costs b. tend to have high variable costs c. tend to have low operating leverage d. tend to have low sales levels 13-3. Given fixed costs of \$100,000, variable costs of \$7.00 per unit, and a sales price per unit of \$10.00, calculate the break-even point in units. a. 10,000 b. 33,333 c. 14,286 d. 5,882 13-4. Given fixed costs of \$200,000, variable costs of \$6.00 per unit, and a sales price per unit of \$7.00, calculate the break-even point in units. a. 200,000 b. 33,333 c. 15,385 d. 28,571 13-5. Firms with relatively low fixed operating costs and high variable operating costs can best be described as: a. having a high degree of operating leverage b. having a low degree of operating leverage c. having a normal degree of operating leverage d. having no operating leverage 154

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13-6. If variable costs = \$10.00 per unit; and the selling price = \$13.00 per unit, and the break-even point in units = 100,000, calculate the fixed costs. a. \$33,333 b. \$ 4,348 c. \$50,000 d. \$300,000 13-7. Degree of operating leverage can best be defined as: a. DOL = % change EBIT % change in Sales b. DOL = % change Sales % change in EBIT c. DOL = change EBIT change in Sales d. DOL = % change Net Income % change in Sales 13-8. If sales in 1990 were \$100,000 and in 2000 sales were \$125,000; If operating income in 1999 were \$50,000 and in 2000 were \$75,000; If net income in 1999 were \$10,000 and in 2000 were projected to be \$15,000; calculate DOL: a. 1 b. 0.5 c. 2 d. 6 13-9. Total variable costs are \$15,000, sales \$50,000, and fixed costs \$15,000; calculate DOL. a. 1.75 b. 0.69 c. 1.45 d. 2 13-10. Whenever fixed costs are greater than zero, DOL is: a. less than 1 b. equal to 0 c. greater than 1 d. nonexistent 155
13-11. Operating leverage has the effect of triggering: a. a smaller percentage change in EBIT when a given percentage change in sales

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This note was uploaded on 01/21/2011 for the course ACC 452 taught by Professor Mr.cula during the Spring '10 term at Abraham Baldwin Agricultural College.

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Chapter 13 MC - CHAPTER THIRTEEN Multiple Choice Questions...

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