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FINC400 I004 quiz 3

Question # 00000871
Subject: Finance
Due on: 09/11/2013
Posted On: 09/09/2013 03:30 PM

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FINC400 I004 Sum 13

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.25pt="">

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

.25pt="">(point) Profit is generally adequate to finance significant growth.

.25pt="">

A. True

B. False

Question 5 of 25

4.0 Points

.25pt="">The degree of combined leverage is the sum of the degree of operating leverage and the degree of financial leverage.

.25pt="">

A. True

B. False

Question 6 of 25

4.0 Points

.25pt="">If fixed costs rise while other variables stay constant

.25pt="">

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

.25pt="">Operating leverage emphasizes the impact of using fixed assets in the business.

.25pt="">

A. True

B. False

Question 8 of 25

4.0 Points

.25pt="">(point) In financial statements, the number of units shown in cost of goods sold as compared to the number of the units actually produced

.25pt="">

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

.25pt="">(point) Which of the following is most likely to increase the final number for notes payable in the pro forma balance sheet?

.25pt="">

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

.25pt="">An increase in sales and profits generates the necessary cash required for economic growth.

.25pt="">

A. True

B. False

Question 12 of 25

4.0 Points

.25pt="">The percent-of-sales forecast is likely to be most accurate when used with cyclical companies.

.25pt="">

A. True

B. False

Question 13 of 25

4.0 Points

.25pt="">Pro forma financial statements are

.25pt="">

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

.25pt="">(point) When the cost of raw materials is increasing, FIFO accounting

.25pt="">

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

.25pt="">(point) If sales volume exceeds the break-even point, the firm will experience

.25pt="">

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

.25pt="">The value of ending inventory should be equal to beginning inventory plus total production costs minus cost of goods sold.

.25pt="">

A. True

B. False

Question 17 of 25

4.0 Points

.25pt="">(point) Leverage works best when volume is increasing.

.25pt="">

A. True

B. False

Question 18 of 25

4.0 Points

.25pt="">(point) The percent-of-sales method would be more accurate under a steady sales assumption than cyclical sales.

.25pt="">

A. True

B. False

Question 19 of 25

4.0 Points

.25pt="">If the price per unit decreases because of competition but the cost structure remains the same

.25pt="">

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

.25pt="">

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

.25pt="">
Refer to the figure above. The Degree of Operating Leverage is

.25pt="">

A.1.40x

B.1.56x

C.3.33x

D.2.22x

Question 21 of 25

4.0 Points

.25pt="">(point) The percent-of-sales method for financial forecasting assumes that balance sheet accounts maintain a constant relationship to sales.

.25pt="">

A. True

B. False

Question 22 of 25

4.0 Points

.25pt="">(point) As the contribution margin rises, the breakeven point goes down.

.25pt="">

A. True

B. False

Question 23 of 25

4.0 Points

.25pt="">(point) In the percent-of-sales method, an increase in dividends

.25pt="">

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

.25pt="">Which of the following is not true about leverage?

.25pt="">

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

.25pt="">The finance department should work independently without the input of other departments because there may be significant biases when creating proformas.

.25pt="">

A. True

B. False

Tags quiz i004 finc400 point points question true false leverage degree sales required breakeven financial funds costs number cost increase rises declines sold goods minus following forma inventory total statements margin equal unit

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FINC400 I004 quiz 3

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Posted On: 09/09/2013 03:32 PM
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Preview: and xxxxxxxxx  D xx increase in xxxxx price Question xx of xxx x PointsThe xxxxx of ending xxxxxxxxx should be xxxxx to xxxxxxxxx xxxxxxxxx plus xxxxx production costs xxxxx cost of xxxxx sold xxx xxxxxxx FalseQuestion xx of 254 x Points(point) Leverage xxxxx best xxxx xxxxxx is xxxxxxxxxx  A True B xxxxxxxxxxxxx 18 of xxx 0 xxxxxxxxxxxxx xxx percent-of-sales xxxxxx would be xxxx accurate under x steady xxxxx xxxxxxxxxx than xxxxxxxx sales  A xxxxxxx FalseQuestion 19 xx 254 x xxxxxxxx the xxxxx per unit xxxxxxxxx because of xxxxxxxxxxx but xxx xxxx structure xxxxxxx the same A xxx breakeven point xxxxx  B xxx xxxxxx of xxxxxxxx leverage declines xxx the degree xx financial xxxxxxxx xxxxxxxx  D xxx of theseQuestion xx of 254 x PointsSales xxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx costs         300,000Contribution xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx manufacturing costs         200,000Operating xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx before taxes         425,000Taxes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Income $      297,500Refer xx xxx figure xxxxx The Degree xx Operating Leverage xxxxx 1 xxxxxx x 56x C x 33x D 2 xxxxxxxxxxx 21 of xxx 0 xxxxxxxxxxxxx xxx percent-of-sales xxxxxx for financial xxxxxxxxxxx assumes that xxxxxxx.....
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