Compared to companies that have a cost structure that is mainly comprised of fixed costs, companies with a cost structure that is mainly comprised of variable costs would: O a. Be vulnerable to adverse effects of economic downturn O b. Have low operating leverage Oc. Be able to enhance their profits at a higher degree Od. Beconsidered more risky

Compared to companies that have a cost structure that is mainly comprised of fixed costs, companies with a cost structure that is mainly comprised of variable costs would: O a. Be vulnerable to adverse effects of economic downturn O b. Have low operating leverage Oc. Be able to enhance their profits at a higher degree Od. Beconsidered more risky

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 4DQ: A company accepts incremental business at a special price that exceeds the variable cost. What other...

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Compared to companies that have a cost structure that is mainly comprised of variable costs, companies with a cost :structure that is mainly comprised of fixed costs would Have limited ability to enhance their profits at a higher degree a O Have low operating leverage b O Be less vulnerable to adverse effects of economic downturn cO Be considered more risky .d O
Which of the following statements is/are true regarding the impact of a company's cost structure? Cost structure can have a significant impact on a company's profitability By outsourcing production, companies generally reduce fixed costs, which will impact their cost structure A higher contribution margin ratio indicates a larger reliance on fixed costs relative to variable costs Companies with a greater reliance on variable costs will have a higher margin of safety ratio All of the above statements are true
?Which of the following statements about operating leverage is false The degree of operating leverage is higher for companies with higher fixed costs .a O .Keeping all factors constant, the higher the contribution margin, the higher the operating leverage .b O If the degree of operating leverage higher for a company, this means that the company is more risky than .another company with low degree of operating leverage .c O All of the given answer's are true d O Operating leverage measures how operating income will be affected by changes in sales .e O
Which of the following statements about operating leverage is false? a. Operating leverage measures how operating income will be affected by changes in sales b. The degree of operating leverage is higher for companies with lower fixed costs c. Keeping all factors constant, the higher the contribution margin, the higher the operating leverage. d. All of the given answers are true. e. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage.
1)What is cost behavior analysis? and Why is cost behavior analysis important to management? 2)“Break-even analysis is of limited use to management because a company cannot survive by just breaking even.” Do you agree? Agree or not agree, please describe your line of reasoning.
Which of the following items will not cause the company's ROA to increase? Multiple Choice O O Reducing costs. Reducing company assets without impacting sales. Increasing company assets. Increasing the selling price per unit. $
Give typing answer with explanation and conclusion 5. Which of the following statements is correct? A-- All the answers are correct. B-- A more direct method of calculating the DOL is to use the following equation is DOL = (Sales - Variable Costs)/EBIT. C-- Because the amount of debt is determined by managerial choice, the business risk that a firm faces is also determined by management. D-- Fixed costs are those costs that are expected to change at the same rate as the firm’s sales. E-- If a firm’s operating costs are all variable, then any variation in sales will be less than the variation in EBIT.
Which of the following is not one of the benefits of breakeven analysis to businesses?A. Determining the lowest selling priceB. Choosing the most profitable product typesC. Determination of firm valueD. Differentiation of fixed variable expensesE. Conducting decline in sales analysis
Which of the following costs are always incremental and relevant in decision analysis? a) Opportunity costs and sunk costs b) Avoidable costs and opportunity costs c) Only avoidable costs d) Avoidable costs and sunk costs Which of the following will increase a company's breakeven point? a) reducing its total fixed costs b) increasing the selling price per unit c) increasing variable cost per unit d) increasing contribution margin per unit
All other things the same, which of the following would be true of the contribution margin and variable costs of a company with high fixed costs and low variable costs as compared to a company with low fixed costs and high variable costs? Contribution Margin Variable Costs A. Higher Higher B. Lower Higher C. Higher Lower D. Lower Lower Option A Option B Option C Option D
Which of the following statements about operating leverage is false? O a. If the degree of operating leverage higher for a company, this means that the company is more riskyt another company with low degree of operating leverage. O b. Keeping all factors constant, the higher the contribution margin, the lower the operating leverage. O c. Operating leverage measures how operating income will be affected by changes in sales O d. All of the given answers are true. The degree of operating leverage is higher for comnanies with higher fived costs = here to search - hp %23 6. 7 V 3 4 W E R T' Y 岁 S D F G H K. V M. Σ 00 近

Which of the following statements about operating leverage is false? O a. All of the given answers are true. O b. Keeping all factors constant, the higher the contribution margin, the higher the operating leverage. OC. Operating leverage measures how operating income will be affected by changes in sales O d. If the degree of operating leverage higher for a company, this means that the company is more risky than another company with low degree of operating leverage. The degree of operating leverage is higher for companies with lower fixed costs O e.