FINC400 I004 Sum
13
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Question 1 of 25
4.0
Points
A lower price for the firm’s product
will reduce the firm’s breakeven point.
A.
True
B.
False
uestion
2 of 25
4.0 Points
(point)
Profit is generally adequate to finance significant growth.
A.
True
B.
False
Question
5 of 25
4.0 Points
The
degree of combined leverage is the sum of the degree of operating leverage and
the degree of financial leverage.
A.
True
B.
False
Question
6 of 25
4.0 Points
If fixed
costs rise while other variables stay constant
A.the
breakeven point rises.
B.degree
of operating leverage increases.
C.total
profit declines.
D.all
of these
Question
7 of 25
4.0 Points
Operating
leverage emphasizes the impact of using fixed assets in the business.
A.
True
B.
False
Question
8 of 25
4.0 Points
(point)
In financial statements, the number of units shown in cost of goods sold as compared
to the number of the units actually produced
A.is
higher.
B.is
lower.
C.is
the same.
D.can
be either higher or lower.
Question 9 of 25
4.0
Points
The contribution margin is equal to price per unit minus total
costs per unit.
A.
True
B.
False
Question
10 of 25
4.0 Points
(point)
Which of the following is most likely to increase the final number for notes
payable in the pro forma balance sheet?
A.decrease
in inventory.
B.increase
in retained earnings.
C.decrease
in accounts payable.
D.decrease
in accounts receivable.
estion
11 of 25
4.0 Points
An
increase in sales and profits generates the necessary cash required for
economic growth.
A.
True
B.
False
Question 12 of 25
4.0 Points
The
percent-of-sales forecast is likely to be most accurate when used with cyclical
companies.
A.
True
B.
False
Question
13 of 25
4.0 Points
Pro forma
financial statements are
A.the
most comprehensive means of financial forecasting.
B.often
required by prospective creditors.
C.projections
of financial statements for a future period.
D.all
of these.
Question 14 of 25
4.0 Points
(point)
When the cost of raw materials is increasing, FIFO accounting
A.yields
higher ending inventory values than LIFO.
B.produces
higher unit sales than using LIFO.
C.yields
higher cost of goods sold than LIFO.
D.All
of these.
Question
15 of 25
4.0 Points
(point)
If sales volume exceeds the break-even point, the firm will experience
A.an
operating loss.
B.an
operating profit.
C.an
increase in plant and equipment.
D.an
increase in stock price.
Question
16 of 25
4.0 Points
The value
of ending inventory should be equal to beginning inventory plus total
production costs minus cost of goods sold.
A.
True
B.
False
Question
17 of 25
4.0 Points
(point)
Leverage works best when volume is increasing.
A.
True
B.
False
Question
18 of 25
4.0 Points
(point)
The percent-of-sales method would be more accurate under a steady sales
assumption than cyclical sales.
A.
True
B.
False
Question
19 of 25
4.0 Points
If the
price per unit decreases because of competition but the cost structure remains
the same
A.the
breakeven point rises.
B.the
degree of combined leverage declines.
C.the
degree of financial leverage declines.
D.All
of these
Question
20 of 25
4.0 Points
Sales (100,000 units)
$ 1,000,000
Variable costs
300,000
Contribution
margin
700,000
Fixed manufacturing costs
200,000
Operating income
500,000
Interest
75,000
Earnings before taxes
425,000
Taxes (30%)
127,500
Net Income
$ 297,500
Refer to the figure above. The Degree of Operating Leverage is
A.1.40x
B.1.56x
C.3.33x
D.2.22x
Question 21 of 25
4.0 Points
(point)
The percent-of-sales method for financial forecasting assumes that balance
sheet accounts maintain a constant relationship to sales.
A.
True
B.
False
Question
22 of 25
4.0 Points
(point)
As the contribution margin rises, the breakeven point goes down.
A.
True
B.
False
Question
23 of 25
4.0 Points
(point)
In the percent-of-sales method, an increase in dividends
A.will
increase required new funds.
B.will
decrease required new funds.
C.has
no effect on required new funds.
D.more
information is needed.
uestion
24 of 25
4.0 Points
Which of
the following is not true about leverage?
A.operating
leverage influences the top half of the income statement, determining EBIT.
B.financial
leverage deals with the bottom half of the income statement, determining EPS
C.combined
leverage utilizes the entire income statement, showing the impact of change
in volume on EBIT.
D.none
of these
Question
25 of 25
4.0 Points
The
finance department should work independently without the input of other
departments because there may be significant biases when creating proformas.
A.
True
B.
False
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