Explain why a segment with an operating loss can cause the company to have a decrease in total operating income if the segment is dropped.

Q: “A branch office or business segment that shows negative operating income should be shut down.” Do…

A: Operating Income:Operating income is income which is earned by carrying out the regular business…

Q: The degree of operating leverage cannot be used to compare companies. measures how much of each…

A: Operating leverage is a financial efficiency ratio which is used to measure the effectiveness of…

Q: The margin of safety can be defined as the amount by which sales can decrease before losses are…

A: Total sales of a company can be divided into Margin of safety sales and break even sales.

Q: Explain how a business can earn a positive gross profit on its sales and still have a net loss.

A: Gross profit: It can be defined as the difference between the cost of goods sold and the net sales…

Q: Which of the following statements about operating leverage is false?

A: The answer for the multiple choice question and relevant explanation are presented hereunder :

Q: If a company decreases the variable expense per unit while increasing the total fixed expenses, the…

A: Breakeven Point: The breakeven point is the level of creation at which the costs of creation are…

Q: Rate of return in an organization can be improved by a) Decrease operating assets b) Increase…

A: Assets A company has a lot of resources, both monetary and non-monetary. However, only resources…

Q: The manager of Sunshine bakery is disappointed with the reported net income for the period. The…

A: Introduction: Activity-based costing (ABC) is a method of more exactly allocating overhead costs by…

Q: When sales volume increases, which company will experience a larger percentage increase in profit:…

A: Cost Volume Profit Analysis (CVP Analysis): This analysis is helpful in determining that how any…

Q: If the margin of safety is 0, then a. the company is precisely breaking even. b. the company is…

A: Break-even point: The break-even point refers to a point where the total cost is equal to the total…

Q: Classify each of the following as a problem or a symptom. If it is a symptom, give two examples of a…

A: a.

Q: Explain what the significance of having a high/low Price-to-Book ratio means about the company's

A: Price/Book value is ratio of stock price in actual market and book value is value of share as books…

Q: A graphic depiction of the break-even point is known as a cost-volume-profit (CVP) chart whereby the…

A: The representation of break even point in graphical form is said to be cost volume profit analysis.

Q: The break-even point is the sales level at which a company neither earns a profit nor incurs a loss…

A: The break even sales units are calculated as fixed cost divided by contribution margin per unit.

Q: Margin of Safety (MOS) in dollars indicates how much sales must decrease before the company will be…

A: Margin of safety is the excess of actual revenue over its break even revenue.

Q: gross profit margin (gross profit/sales) is an important determinant of NOPAT. identify two factors…

A: Gross profit: Gross profit is a profit for a company arrived after deducting cost associated with…

Q: Which of the following statements about the quality of earnings ratio is true? Multiple Choice…

A: Lets understand the basics. Quality of earning ratio indicates the cashflow from operating activity…

Q: If the margin of safety is 0, then The company is precisely breaking even The company is operating…

A: Margin of safety is sales above the break-even point. If margin of safety is 0, it indicates sales…

Q: The trend for cost of goods sold is it is decreasing as a percentage of sales and the trend for…

A: CVP analysis is used to analyze the impact of changes in sales volume on costs and operational…

Q: Explain two possible risks to a company that makes losses regularly?

A: There are many possible risks of bussiness losses.

Q: Break-even analysis is concerned with determining a point at which the company can minimize total…

A: Break-even point is the point reached by the company where the revenues and costs of the firm are in…

Q: Th e information provided by a low-quality fi nancial report will most likely :A . decrease company…

A: SOLUTION:- Financial reporting quality is related to the quality of the information contained in…

Q: Please select the option that best analyzes the PROFIT MARGIN for our example company.   The profit…

A: Profit margin is the percentage of sales, which explains how much profit a firm can earn for…

Q: Break-Even Point AnalysisThe break-even point is usually expressed as the amount of revenue that…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

Q: As a company's sales move farther from its breakeven point(increasing movement), one would expect…

A: Step 1: Operating leverage (OL) is a measure for revenue growth. It is measure of risk in a…

Q: Suppose the current assets of a company decrease over time while all else remains unchanged, then…

A: Meaning of Return on Investment  Return on investment (ROI) is performance measure used to evaluate…

Q: The margin of safety is the amount that sales can drop before the company incurs a loss True False

A: Margin of safety = Actual sales - Break-even sales

Q: true or false The smaller the contribution margin ratio, the larger the amount of sales required to…

A: Contribution margin ratio: The contribution margin represents the incremental cash generated for…

Q: if costs are two high: Select one: a. Company loses work b. Company loses money C. It means error in…

A: Costs denote the amount that a company spends on the creation or production of goods and services.

Q: Explain how a shift in the sales mix could result in both a higher break-even point and a lower net…

A: Sales mix involves the composition of different products and some products have a higher margin of…

Q: The chairman of the board of directors of the company for which you are chief accountant has told…

A: Historical cost is usually the price at which the asset is recorded that was purchased at. As the…

Q: Steadily increasing cost of goods sold as a percentage of net revenues is an indication ofa.…

A: Answer: a. decreasing earnings quality.

Q: How important is profit? How can a company survive when it isn't making a profit? How can a company…

A: profit is the most important thing for business order to exist for a longer period of time and have…

Q: The statement above is best completed by the answers in row: Row ii the company company breaks even…

A: The question is based on the concept of a two-dimensional graph and its interpretation. X-axis and…

Q: Increasing earnings quality could be indicated bya. an improving operating earnings/sales ratio.b. a…

A: Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities,…

Q: The method of comparators can be applied using the ratio of operating income to revenue as a basis…

A: Operating Income is an accounting number that measures the amount of operating profit for a company…

Q: One drawback to the weighted average method is that you might end up selling products at a loss True…

A: Weighted Average Method is a method of valuing the cost at an average value instead of their real or…

Q: A company's break-even point will  not be changed by:

A: Break-even point i Break-even point is a level of activity where no profit is gained and no loss…

Q: Which of the following occurs if a company experiences a decrease in its fixed costs? Select one: a.…

A: Break-even point: In the accounting term break-even point is a condition where the income or profit…

Q: The amount by which a company's sales can decline before losses are incurred is called the: degree…

A: Cost-Volume-Profit (CVP) analysis is a management tool which establishes the relationship between…

Q: Which one of the following statements is correct: O a. At periods of economic downturn, companies…

A: Margin of safety means the difference between the budget sales and breakeven sales. It means the…

Q: A business that is below the operating break-even point:

A: The operating break even point for a business is the point at which sales revenue covers all of the…

Q: In a cost-volume-profit analysis, explain what happens at the break-even point and why companies do…

A: Break-even point: It is that point in the business when all its costs have been recovered.…