Corporate Finance Quiz 5

Sales commissions and raw material are variable operating costs True
A highly automated plant would generally have more fixed operating costs than variable operating costs.
As the contribution margin rises, the breakeven point goes down True
At the break-even point, a firm’s operating profits are True
A firm’s break-even point will rise if unit variable operating cost rises
Cash breakeven analysis eliminates the depreciation expense and other non-cash charges from fixed operating costs True
A high DOL means: there are high fixed operating costs
The degree of financial leverage is concerned with the relationship between changes in EBIT and changes in EPS.
Degree of combined leverage considers the impact of a change in sales volume on the change in operating income. False

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