Question 1

The uses of breakeven analysis are all of the following EXCEPT:

Accepted Answer

A) forecasting the profitability of the firm 
B) forecasting the impact of certain economic conditions on the firm's profitability 
C) analyzing the impact of substituting fixed costs for variable costs in production 
D) analyzing the profit impact of a firm's restructuring efforts. 
A) forecasting the profitability of the firm 
B) forecasting the impact of certain economic conditions on the firm's profitability 
C) analyzing the impact of substituting fixed costs for variable costs in production 
D) analyzing the profit impact of a firm's restructuring efforts. B

Question 2

The difference between the selling price per unit and the variable cost per unit is the:

Accepted Answer

A) contribution to the bottom line 
B) contribution to revenue 
C) contribution margin 
D) contribution to EBIT 
A) contribution to the bottom line 
B) contribution to revenue 
C) contribution margin 
D) contribution to EBIT C

Question 3

Breakeven analysis is normally performed for a planning period of:

Accepted Answer

A) five years 
B) one year or less 
C) ten years 
D) one month 
A) five years 
B) one year or less 
C) ten years 
D) one month B

Question 4

The breakeven point occurs where total revenues intersect with:

Accepted Answer

A) market returns 
B) the risk-free rate 
C) total costs 
D) total interest and taxes 
A) market returns 
B) the risk-free rate 
C) total costs 
D) total interest and taxes

Question 5

The Foggy Futures Weather Network offers an annual almanac for sale each year with information about predicted weather patterns, severe storm safety tips and a tracking chart.The finished product sells for $35 with a variable cost per unit of $21.The company has operating costs of $1,050,000.What is the probability of the firm having operating losses if the firm has a standard deviation of 4,000 units and the firm expects to sell 80,000 almanacs? (A normal distribution table - Table V - must accompany this problem)

Accepted Answer

A) 10.56% 
B) 11.12% 
C) 14.92% 
D) 13.57% 
A) 10.56% 
B) 11.12% 
C) 14.92% 
D) 13.57%

Question 6

What is the breakeven point for Rough and Tough Clothiers, makers of heavy duty dungarees? They have the following costs:
Raw materials: $15 per pair
Labor costs: $ 8 per pair
Commissions: $ 2 per pair
Utilities: $ 50,000
Rent: $ 96,000
Taxes: $ 30,000
Salaries: $150,000
The price of the dungarees is $55 per pair.

Accepted Answer

A) 13,040 
B) 10,867 
C) 25,000 
D) 17,650 
A) 13,040 
B) 10,867 
C) 25,000 
D) 17,650

Question 7

The Foggy Futures Weather Network offers an annual almanac for sale each year with information about predicted weather patterns, severe storm safety tips and a tracking chart.The finished product sells for $35 with a variable cost per unit of $21.The company has operating costs of $1,050,000.The company has operating costs of $1,050,000.What is the firm's breakeven point in dollars?

Accepted Answer

A) $1,750,000 
B) $4,670,000 
C) $2,625,000 
D) $3,875,566 
A) $1,750,000 
B) $4,670,000 
C) $2,625,000 
D) $3,875,566

Question 8

The Fanny Nanny Weight Monitors Corporation offers an annual diet plans for sale each year with information about nutrition, diet tips and food substitutes.The finished product sells for $60 with a variable cost per unit of $27.The company has fixed operating costs of $1,250,000.What is its breakeven point?

Accepted Answer

A) 22,187 
B) 37,879 
C) 56,124 
D) 48,961 
A) 22,187 
B) 37,879 
C) 56,124 
D) 48,961

Question 9

What are the possible uses for breakeven analysis?

Accepted Answer

Breakeven analysis can be used for:
1.fo

Question 10

Breakeven analysis can be used:

Accepted Answer

A) when planning renovations 
B) when planning expansions 
C) when planning financial resources 
D) when planning new product development 
A) when planning renovations 
B) when planning expansions 
C) when planning financial resources 
D) when planning new product development

Question 11

List the limitations of breakeven analysis:

Accepted Answer

Breakeven analysis makes certain assumpt

Question 12

Bouncy Bungee Rubber Band Company is trying to determine its probability of incurring a loss.Its fixed costs are $2,760,000 per year, it sells its rubber bands for $3.75 per pack and the variable cost of these packs is $.75.They estimate they will sell 1,000,000 packs this year and they have a standard deviation of 40,000 units.(A normal distribution table - Table V - must accompany this problem).

Accepted Answer

A) 3.22% 
B) 6.71% 
C) 5.48% 
D) 2.87% 
A) 3.22% 
B) 6.71% 
C) 5.48% 
D) 2.87%

Question 13

The Foggy Futures Weather Network offers an annual almanac for sale each year with information about predicted weather patterns, severe storm safety tips and a tracking chart.The finished product sells for $35 with a variable cost per unit of $21.The company has operating costs of $1,050,000.Using 100,000 units as a base, what is the degree of operating leverage?

Accepted Answer

A) 6.2 
B) 5.7 
C) 7.9 
D) 4.0 
A) 6.2 
B) 5.7 
C) 7.9 
D) 4.0

Question 14

How can a firm have more than one breakeven output point?

Accepted Answer

In considering the breakeven analysis mo

Question 15

An example of a noncash outlay is:

Accepted Answer

A) property 
B) marketing costs 
C) advertising 
D) depreciation 
A) property 
B) marketing costs 
C) advertising 
D) depreciation

Question 16

What is the breakeven point in dollars for Zippy Dippy Swimwear, makers of bathing suits and accessories? They have the following costs:
$$\begin{array} { l l } 
\text { raw materials: } & \$ 25 \text { per bathing suit } \
& \$ 8 \text { per towel } \
& \$ 16 \text { per beach umbrella } \
& \$ 37 \text { per swimsuit cover-up } \
& \$ 18 \text { average per suit } \
& \$ 10 \text { per umbrella } \
& \$ 3 \text { per towel } \
\text { labor costs: } & \$ 20 \text { per cover-up } \
& \$ 12 \text { per item } \
& \$ 150,000 \
& \$ 196,000 \
\text { commissions: } & \$ 230,000 \
\text { utilities: } & \$ 550,000 \
\text { rent: } & \text { taxes: } \
\text { salaries: } & \text { The price of each suit is } \$ 85 . \
\text { The price of each towel is } \$ 25 . \
\text { The price of each umbrella is } \$ 40 . \
\text { The price of each cover-up is } \$ 81 .
\end{array}$$

Accepted Answer

A) $3,172,024 
B) $4,947,196 
C) $7,887,259 
D) $6,425,583 
A) $3,172,024 
B) $4,947,196 
C) $7,887,259 
D) $6,425,583

Question 17

The contribution margin per unit is the difference between:

Accepted Answer

A) the selling price per unit and fixed costs 
B) the fixed costs and the variable costs 
C) the variable cost per unit and the selling price per unit 
D) the variable costs and the number of units sold 
A) the selling price per unit and fixed costs 
B) the fixed costs and the variable costs 
C) the variable cost per unit and the selling price per unit 
D) the variable costs and the number of units sold

Question 18

The Foggy Futures Weather Network offers an annual almanac for sale each year with information about predicted weather patterns, severe storm safety tips and a tracking chart.The finished product sells for $35 with a variable cost per unit of $21.The company has operating costs of $1,050,000.What is the firm's breakeven point in units?

Accepted Answer

A) 75,000 
B) 50,000 
C) 80,000 
D) 65,000 
A) 75,000 
B) 50,000 
C) 80,000 
D) 65,000

Question 19

Explain the composition of operating costs and why they can cause an inaccurate breakeven analysis.

Accepted Answer

Breakeven analysis assumes that costs ca

Question 20

In a graphic breakeven analysis, the point where total revenue is less than total cost indicates that the firm has:

Accepted Answer

A) net operating capital 
B) cash flow from investing 
C) a negative EBIT 
D) a positive return on capital 
A) net operating capital 
B) cash flow from investing 
C) a negative EBIT 
D) a positive return on capital

The uses of breakeven analysis are all of the following EXCEPT:

The difference between the selling price per unit and the variable cost per unit is the:

Breakeven analysis is normally performed for a planning period of:

The breakeven point occurs where total revenues intersect with:

What are the possible uses for breakeven analysis?

Breakeven analysis can be used:

List the limitations of breakeven analysis:

How can a firm have more than one breakeven output point?

An example of a noncash outlay is:

The contribution margin per unit is the difference between:

Explain the composition of operating costs and why they can cause an inaccurate breakeven analysis.

In a graphic breakeven analysis, the point where total revenue is less than total cost indicates that the firm has:

The Role and Objective of Financial Management

The Domestic and International Financial Marketplace

Evaluation of Financial Performance

Financial Planning and Forecasting

The Time Value of Money

A: The Time Value of Money

Fixed-Income Securities: Characteristics and Valuation

Common Stock: Characteristics, Valuation, and Issuance

Analysis of Risk and Return

Capital Budgeting and Cash Flow Analysis

Capital Budgeting: Decision Criteria and Real Option Considerations

A: Capital Budgeting: Decision Criteria and Real Option Considerations

Capital Budgeting and Risk

The Cost of Capital, Capital Structure, and Dividend Policy

Capital Structure Concepts

Capital Structure Management in Practice

Dividend Policy

Working Capital Management

The Management of Cash and Marketable Securities

The Management of Accounts Receivable and Inventories

Lease and Intermediate-Term Financing

Financing with Derivatives

A: Financing with Derivatives

Risk Management

International Financial Management

Corporate Restructuring

Filters

Exam 14: A: Capital Structure Management in Practice

The uses of breakeven analysis are all of the following EXCEPT:

The difference between the selling price per unit and the variable cost per unit is the:

Breakeven analysis is normally performed for a planning period of:

The breakeven point occurs where total revenues intersect with:

What are the possible uses for breakeven analysis?

Breakeven analysis can be used:

List the limitations of breakeven analysis:

How can a firm have more than one breakeven output point?

An example of a noncash outlay is:

The contribution margin per unit is the difference between:

Explain the composition of operating costs and why they can cause an inaccurate breakeven analysis.

In a graphic breakeven analysis, the point where total revenue is less than total cost indicates that the firm has:

The Role and Objective of Financial Management

The Domestic and International Financial Marketplace

Evaluation of Financial Performance

Financial Planning and Forecasting

The Time Value of Money

A: The Time Value of Money

Fixed-Income Securities: Characteristics and Valuation

Common Stock: Characteristics, Valuation, and Issuance

Analysis of Risk and Return

Capital Budgeting and Cash Flow Analysis

Capital Budgeting: Decision Criteria and Real Option Considerations

A: Capital Budgeting: Decision Criteria and Real Option Considerations

Capital Budgeting and Risk

The Cost of Capital, Capital Structure, and Dividend Policy

Capital Structure Concepts

Capital Structure Management in Practice

Dividend Policy

Working Capital Management

The Management of Cash and Marketable Securities

The Management of Accounts Receivable and Inventories

Lease and Intermediate-Term Financing

Financing with Derivatives

A: Financing with Derivatives

Risk Management

International Financial Management

Corporate Restructuring

Filters