The degree of operating leverage Select one: O a. can be computed by dividing total contribution margin by net income O b. affects the company's selling price c. provides a measure of the company's market positioning O d. is used to explain the company's margin of safety

The degree of operating leverage Select one: O a. can be computed by dividing total contribution margin by net income O b. affects the company's selling price c. provides a measure of the company's market positioning O d. is used to explain the company's margin of safety

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 43MCQ: Which of the following is not included in the Dupont framework? a. a measure of profitability c. a...

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What analysis ensures that the income for the firm will cover its variable costs? a. ratio analysis b. financial analysis c. cost volume profit analysis d. sales analysis
Which of the following option shows the rate at which company is earning profit? Select one: a. All options are correct b. Margin of safety c. Contribution margin d. Profit volume ratio
Which of the following equations can be used to compute a firm’s magnitude of operating leverage? Net income/sales Fixed costs/contribution margin Net income/gross margin Contribution margin/net income
The measure that reflects an organization's variable and fixed cost relationship and indicates how a percentage change in sale from the current level will impact from the current level will impact profits is called the a. break-even point. b. contribution margin. ç. degree of operating leverage. d gross margin. e. margin of safety.
Is there a point in a cost-volume-profit analysis when the company is expected to profit?
Degree of operating leverage (DOL) measures the sensitivity of OCF in response to changes of The higher the DOL, the the volatility of a firm's operating income. Select one: a. sales quantity; lower O b. sales quantity; higher O c. fixed costs; lower O d. fixed costs; higher O e. variable costs; higher
Product profitability is best judged through A. P/v ratio B. Gross profit ràtio C. Operating leverage D. None of these
Cost-volume-profit (CVP) analysis for revenue planning determines: The desired profit level of a firm. Both revenue maximization and cost minimization. The costs associated with a certain level of revenue. The max amount of revenue a firm can receive. The revenue required to achieve a desired profit level.
1. A profit-volume graph differs from a cost-volume-profits graph in that a profit-volume graph displays onlya. costs associated with units produced.b. operating income associated with expected sales.c. revenues and costs associated with sales volume.d. revenues expected at targeted sales levels.e. All of these are correct. 2. Fixed expenses that cannot be directly traced to individual segments are calleda. cost structure.b. direct fixed expenses.c. operating leverage.d. common fixed expenses.e. indifference point. 3. If sales remain the same and the margin of safety increases, which of the following is true?a. The break-even point has decreased.b. The common fixed costs have increased.c. The break-even point has remained constant.d. Variable costs have increased. 4. Match the type of income statement to the costs it includes.a. Variable costing income statementb. Absorption costing income statementc. Both types of income statements 1. Direct materials for units sold2.…
Indicator operational leverage is defined as a. A ratio of variable costs over total costs of respective business entity b. A ration of total costs over fixed costs of respective business entity c. A ratio of fixed costs over total costs of respective business entity d. A percentage amount of total costs that are employed for the operational act
For CVP analysis calculations, which of the following statements is correct? A. In target profit calculations, sales revenue is less than total costs. B. CVP analysis relies on our knowledge of cost function to express relationships among costs, sales volume, and profit. OC. A company's sales mix is ultimately determined by the management of a company. D. The Break-even point is the point at which operating income is greater than $0. O E. If sales volume is expected to be higher than the indifference point, management should choose the cost structure with the higher fixed costs.
The three most common cost behavior classifications are a. variable costs, product costs, and sunk costs b. variable costs, period costs, and differential costs c. variable costs, sunk costs, and opportunity costs d. fixed costs, variable costs, and mixed costs The contribution margin ratio is a. the portion of equity contributed by the stockholders b. the same as profit c. the same as the profit-volume ratio d. the same as the variable cost ratio