The firm with the largest ratio of fixed costs to total costs automatically gets the greatest increase in operating profits from an increase in sales. (A True B False
Q: uestion 2 Which of the following occurs if a company increases its selling price per unit? (Assume…
A: The contribution margin is calculated as the difference between the sales and variable costs. The…
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Q: iv) Why are two break-even points in the above diagram?
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Q: Which of the following statements about operating leverage is false? O a. If the degree of operating…
A: Answer
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Q: 6. What will be the impact on a company's profit if sales mix shifts between low margin and high…
A: Sales mix represents the proportion of sales of each product in relation with the total sales of the…
Q: If a company had a pure fixed cost structure, every dollar of revenue after covering the fixed costs…
A: Step 1 In the pure fixed cost structure, the variable cost does not exist; only fixed cost hit the…
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Q: When sales volume increases, which company will experience a larger percentage increase in profit:…
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Q: The degree of operating leverage Select one: O a. can be computed by dividing total contribution…
A: Leverage is the risk that a company bears.
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A: Variables in the question: Cost function: C(x)=10x+107Revenue function: R(x)=38x
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A: Contribution margin (CM), or dollar contribution per unit, is the selling price per unit minus the…
Q: By modifying the break-even equation, a company is able to determine the sales required to earn a…
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Q: The break-even point is that at which: Select one: O A. The level of activity at which the business…
A: Solution:- Break-even point is the point where the total costs of a business are equal to the total…
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A: Break-even point is the point reached by the company where the revenues and costs of the firm are in…
Q: decrease the selling price per unit by half. Assuming tha ffect on profit? e information in the…
A: Profit would remain unchanged.
Q: ?Which of the following statements about operating leverage is false
A: Operating leverage: Operating leverage can be defined as the measure used to identify the increase…
Q: XYZ Company wishes to gain more market share. In order to do that, the company is planning to double…
A: XYZ company wishes to gain market share. Current Production doubled means quantity is doubled. Fixed…
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A: The sales mix is a formula that calculates how much of each product a company sells in relation to…
Q: Which of the following statements is true? A In linear break-even analysis, the contribution margin…
A: As per the linear break-even model, the contribution margin per unit is the difference between the…
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A: ROI: It basically means the average return on an investment in a particular period in which the…
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A: The question is based on concept to establish relationship between input and change in input with…
Q: A high operating margin implies that ______________ . The company is in a better position to…
A: Operating margin means proportion of operating income over sales
Q: Assuming everything else constant, which of the following will NOT make net profit margins increase?…
A: The objective of the question is to identify which of the given scenarios will not lead to an…
Q: When sales volume is rising do companies with a larger percentage of variable expenses or companies…
A: Hence companies with a larger percentage of variable expenses provide a larger percentage increase…
Q: In the CVP analysis, Which of the following statements about the breakeven point is true? a.…
A: Cost volume profit analysis is useful to find out the different sales volume on the basis of…
Q: Suppose sales volume increase by the same percentage for Company X and Company Y. Use CVP analysis…
A: Cost volume profit (CVP) analysis is the one which is helpful in analyzing the costs and profits of…
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A: The correct answer for the above mentioned question is given in the following steps for your…
Q: If company A has a higher degree of operating leverage than company B, then which of the following…
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Q: Which of the following statements about operating leverage is NOT true? Group of answer choices…
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Q: How does good operating leverage magnify earnings results with modest revenue increase?
A: Operating Leverage: A cost-accounting technique called operational leverage assesses how much a…
Q: The use of fixed costs to extract higher percentage changes in profits as sales activity changes…
A: SOLUTION- DEGREE OF OPERATING LEVERAGE CALCULATES THE PROPORTIONAL CHANGE IN OPERATING INCOME THAT…
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Q: Compared to companies that have a cost structure that is mainly comprised of fixed costs, companies…
A: Operating income shows that how revenue leads to growth in operating income. It is a tool to measure…
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- 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; higherFirms with a high degree of operating leverage: will have a more significant shift in income as sales volume changes have lower fixed costs have low contribution margin ratio are less dependent on volume to add profitsThe difference between the average customer’s willingness to pay and the total costs of a product is known as ______. When a company makes a profit, the difference between the price of the product and the cost of production is known as what? Value creation and value capture are key concepts for which parts of business? If a company innovates in a way that reduces its production costs without affecting any features of the product, would that create value? Suppose a price war was to erupt in the airline market, which causes prices for flights to decline, but affected nothing else about the industry. Would this change the value created by airlines? Suppose a price war was to erupt in the airline market, which causes prices for flights to decline, but affected nothing else about the industry. Would this change the value captured by airlines? Please solve all part and do not give solution in image format thanku
- Assume that the firm whose cost structure is depicted in the figure expects to produce a loss for the upcoming period. The loss would be shown on the graph: by the area diagonally to the right of the break-even point. in some other area not mentioned above. by the area immediately above the break-even point. by the area immediately below the total cost line. by the area diagonally to the left of the break-even point.If a firm's marginal revenue is smaller than its marginal cost, then the firm should collect additional information before taking any action. increase output to increase profit. keep output the same decrease output to increase profit.6..
- If a company decreases its selling price for its products. The Increase? O Total cost O Cost plus pricing O Break even quantity. O Profit itWhich 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.CLEAR MY CHOICE Which of the following statements about CVP analysis is false? O a. Operating income calculations in CVP analysis are based on contribution margin not gross margin. O b. All of the given answers are true. O c. Total revenues and total costs are linear in relation to output units. O d. Managers use (CVP) analysis to study the behavior of and relationship among the elements such as total revenues, total costs, and income O e. Unit selling price, unit variable costs, and total fixed costs are known and remain constant. NEXT PAC AGE ere to search
- XYZ Company wishes to gain more market share. In order to do that, the company is planning to double the current production and sales quantity. At the same time, the company plans to decrease the selling price per unit by half. Assuming that the total fixed cost and the variable cost per unit remain unchanged, what would be the effect on ?profit .Cannot be determined using the information in the question a O Profit would remain unchanged b O Profit would decrease .c O None of the given answers .d O Profit would increase e OGive 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.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