NEW MyLab Finance with Pearson eText -- Access Card -- for Principles of Managerial Finance
14th Edition
ISBN: 9780133543759
Author: Lawrence J. Gitman, Chad J. Zutter
Publisher: PEARSON
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Question
Chapter 13.1, Problem 13.2RQ
Summary Introduction
To discuss:
The operating breakeven point and it changes in fixed operating expenses, the sales price per units and variable costs per unit.
Introduction:
The monetary statement which reports the firm’s monetary performance over a specific time period. The monetary statistics are assessed through giving a summary of how the business incurs in their expenses and revenues through non-operating and operating activities and shows the net loss or profits incurred in the time frame of specific accounting period.
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What's the expected profit at break-even in a cost-volume-profit analysis?
Which of the following conditions would cause the break-even point to decrease?
a.
Increase in unit variable cost
b.
Decrease in unit selling price
c.
Decrease in unit variable cost
d.
Increase in total fixed costs
Which of the following describes the behavior of the fixed cost per unit?
a.remains constant with changes in production
b.decreases with decreasing production
c.decreases with increasing production
d.increases with increasing production
Chapter 13 Solutions
NEW MyLab Finance with Pearson eText -- Access Card -- for Principles of Managerial Finance
Ch. 13.1 - Prob. 1FOPCh. 13.1 - Prob. 1FOECh. 13.1 - What does the term leverage mean? How are...Ch. 13.1 - Prob. 13.2RQCh. 13.1 - What is operating leverage? What causes it? How do...Ch. 13.1 - What is financial leverage? What causes it? How do...Ch. 13.1 - What is the general relationship among operating...Ch. 13.2 - What is a firms capital structure? What ratios...Ch. 13.2 - In what ways are the capital structures of U.S....Ch. 13.2 - What is the major benefit of debt financing? How...
Ch. 13.2 - Prob. 13.9RQCh. 13.2 - Prob. 13.10RQCh. 13.2 - Prob. 13.11RQCh. 13.2 - How do the cost of debt, the cost of equity, and...Ch. 13.3 - Explain the EBIT -EPS approach to capital...Ch. 13.4 - Why do maximizing EPS and maximizing value not...Ch. 13.4 - Prob. 13.15RQCh. 13 - Prob. 1ORCh. 13 - Prob. 13.3STPCh. 13 - Canvas Reproductions has fixed operating costs of...Ch. 13 - Prob. 13.2WUECh. 13 - Prob. 13.3WUECh. 13 - Parker Investments has EBIT of 20,000, interest...Ch. 13 - Cobalt Industries had sales of 150,000 units at a...Ch. 13 - Prob. 13.5PCh. 13 - Prob. 13.24PCh. 13 - Prob. 13.25PCh. 13 - Prob. 13.26P
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- Which of the following statements is true regarding average fixed costs? A. Average fixed costs per unit remain fixed regardless of level of activity. B. Average fixed costs per unit rise as the level of activity rises. C. Average fixed costs per unit fall as the level of activity rises. D. Average fixed costs per unit cannot be determined.arrow_forwardWould 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.arrow_forwardHow does the length of the time horizon affect the classification of a cost as fixed or variable? What is the meaning of short run? Long run?arrow_forward
- When should a segment be dropped? A. only when the decrease in total contribution margin is less than the decrease in fixed cost B. only when the decrease in total contribution margin is equal to fixed cost C. only when the increase in total contribution margin is more than the decrease in fixed cost D. only when the decrease in total contribution margin is less than the decrease in variable costarrow_forwardWhich of the following describes the behavior of the fixed cost per unit? Decreases with decreasing production Decreases with increasing production Increases with increasing production Remains constant with changes in productionarrow_forwardhow would an increase in selling price per unit affect the break-even point and the margin of safety?arrow_forward
- Which of the following is true about the changes in fixed cost? An increase in production will result in an increase in per unit fixed cost. A decrease in fixed cost will result in an increase in variable cost. An increase in production will result in a decrease in per unit fixed cost. A decrease in production will result in an increase in total fixed cost.arrow_forwardWould an increase in variable costs per unit cause a company’s break-even point to increase or decrease? Explain why?arrow_forwardWhat is the break-even point in unit sales?arrow_forward
- Which of the following describes the behavior of the fixed cost per unit? Group of answer choices remains constant with changes in production decreases with increasing production increases with increasing production decreases with decreasing productionarrow_forwardWhich of the following would lead to the breakeven point of a product shifting to the left on a traditional breakeven chart? A An increase in the selling price per unit B An increase in the variable costs of each unit C An increase in the level of fixed costs D A decrease in the selling price per unitarrow_forwardWhich of the following statements is CORRECT with respect to fixed costs per unit? Select one: A. They will decrease as production decreases. B. They will remain the same as production levels change. C. They will increase as production increases. D. They will increase as production decreases.arrow_forward
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