Please I want to learn how to make this problem with a good explanation. One of those there is the possible answer.Thank you If a company decreases the variable expense per unit while increasing the total fixed expenses, the total expenseline relative to its previous position will:A. shift downward and have a steeper slope.B. shift downward and have a flatter slope.C. shift upward and have a steeper slope.D. shift upward and have a flatter slope.E. None of the above2 The information for Sacramento Corporation is given below.Degree of operating leverage:Break-even revenue:224360,000Variable Expense:60% of SalesWhat is the actual net operating income?A. $ 180,000B. $ 216,000C. $ 144,000D. $ 108,000E. None of the above

breakeven revenue *Contribution margin%=Fixed cost

The information for Sacramento Corporation is given below. Degree of operating leverage: Break-even revenue: %24 360,000 Variable Expense: 60% of Sales What is the actual net operating income? A. $ 180,000 B. $ 216,000 C. $ 144,000 D. $ 108,000 E. None of the above

The information for Sacramento Corporation is given below. Degree of operating leverage: Break-even revenue: %24 360,000 Variable Expense: 60% of Sales What is the actual net operating income? A. $ 180,000 B. $ 216,000 C. $ 144,000 D. $ 108,000 E. None of the above

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter13: Capital Structure And Leverage

Section: Chapter Questions

Problem 2Q: Would each of the following increase, decrease, or have an indeterminant effect on a firms...

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Would each of the following increase, decrease, or have an indeterminant effect on a firms break-even point (unit sales)? a. The sales price increases with no change in unit costs. b. An increase in fixed costs is accompanied by a decrease in variable costs. c. Variable labor costs decline; other things are held constant.
Suppose you are analyzing a firm that is successfully executing a strategy that differentiates its products from those of its competitors. Because of this strategy, you project that next year the firm will generate 6.0% revenue growth from price increases and 3.0% revenue growth from sales volume increases. Assume that the firms production cost structure involves strictly variable costs. (That is, the cost to produce each unit of product remains the same.) Should you project that the firms gross profit will increase next year? If you project that the gross profit will increase, is the increase a result of volume growth, price growth, or both? Should you project that the firms gross profit margin (gross profit divided by sales) will increase next year? If you project that the gross profit margin will increase, is the increase a result of volume growth, price growth, or both?
Income statements for two different companies in the same industry are as follows: Required: 1. Compute the degree of operating leverage for each company. 2. Compute the break-even point for each company. Explain why the break-even point for Quintex, Inc., is higher. 3. Suppose that both companies experience a 50 percent increase in revenues. Compute the percentage change in profits for each company. Explain why the percentage increase in Quintexs profits is so much greater than that of Trimax.
Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $170,300 $408,000 Variable costs 68,300 244,800 Contribution margin $102,000 $163,200 Fixed costs 51,000 27,200 Income from operations $51,000 $136,000 a. (pictured) b. (pictured) c. The difference in the (increase/decrease) of income from operations is due to the difference in the operating leverages. Beck Inc.'s (higher/lower) operating leverage means that its fixed costs are a (larger/smaller) percentage of contribution margin than are Bryant Inc.'s.
If total fixed costs decreases while the sale price per unit and the variable costs per unit remainconstant, the:(A) contribution margin increases(B) contribution margin decreases(C) breakeven point increases(D) breakeven point decreases Which of the following would appear on both the budgeted income statement and on theschedule of expected cash disbursements for operating expenses?(A) Depreciation expense(B) Rent expense(C) Sales commission expense(D) Both B and C A business always absorbs its overheads on labour hours. In the 8th period 18,000 hours wereworked, actual overheads were $279,000 and there was$36,000 over-absorption. The overheadabsorption rate per hour was:(A) $15.50(B) $17.50(C) $18.00(D) $13.50
f net profit of the firm is OMR 280,000 and capital employed is OMR 1,400, 000 the return on capital employed will be 20%. During inflation with net profit calculated with replacement cost is OMR 180,000 and capital employed is OMR 22,00,000 the return on capital employed will be 8.2%. This situation expresses the following problem. a. Under historical cost accounting, the profits are overstated, and fixed assets are understated specially when there is increase in the price of the old fixed assets. b. Under historical cost accounting, return on capital employed which is very useful for the valuation of the business by its owners, creditors and management will not be correct and may lead to misleading decision c. Both the given statements are true in the given situation d. Both the given statements are false in the given situation
If a company increases its selling price by P2 per unit due to an increase in its variable labor cost of P2 per unit, the break-even point in pesos will: A. decrease B. increase C. not change D. change but direction is uncertain
Income statements for two different companies in the same industry are as follows: Elgin, Inc Hobart, Inc. Sales: $600,000 $600,000 Less: Variable costs: 360,000 120,000 Contribution margin: $240,000 $480,000 Less: Fixed Costs: 120,000 360,000 Operating income $120,000 $120,000 REQUIRED: 1. Compute the degree of operating leverage for each company. 2. Compute the break-even point for each company. Explain why the break-even point for Hobart, Inc., is higher. 3. Suppose that both companies experience a 30 percent increase in revenues. Compute the percentage change in profits for each company. Explain why the percentage increase in Hobart’s profits is so much greater than that of Elgin.
The degree of operating leverage cannot be used to compare companies. measures how much of each sales dollar is available to cover fixed expenses. does not provide a reliable measure of a company’s earnings volatility. is computed by dividing total contribution margin by net income.
If the percentage change in operating income resulting from a given percentagechange in sales is higher than the percentage change in sales itself, thena. an increase in the selling price would not alter the contribution marginper unit.b. variable costs per unit have increased.c. variable costs have decreased in total.d. the company has operating leverage.e. the company has no fixed costs.
Operating Leverage Income statements for two different companies in the same industry are as follows: Trimax, Inc. Quintex, Inc. $400,000 $562,500 200,000 112,500 $200,000 $450,000 150,000 400,000 $50,000 $50,000 Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income Required: 1. Compute the degree of operating leverage for each company. Trimax Quintex 2. Compute the break-even point in dollars for each company. Trimax, Inc. Quintex, Inc. Why is the break-even point for Quintex, Inc., higher? 3. Suppose that both companies experience a 40 percent increase in revenues. Compute the percentage change in profits for each company, Trimax Quintex
Income statements for two different companies in the same industry are as follows: Required:1. Compute the degree of operating leverage for each company.2. CONCEPTUAL CONNECTION Compute the break-even point in dollars for eachcompany. Explain why the break-even point for Macduff is higher.3. CONCEPTUAL CONNECTION Suppose that both companies experience a 30% increasein revenues. Compute the percentage change in profits for each company. Explain why thepercentage increase in Macduff ’s profits is so much larger than that of Duncan.