Multiple choice

Question 1 

The concept of operating leverage involves the use of __________ to magnify returns at high levels of operation.

A. fixed costs

B. variable costs

C. marginal costs

D. semi-variable costs

 Question 2 

Which of the following questions does break-even analysis attempt to address?

A. How much do changes in volume effect costs and profits?

B. At what point does the firm break even?

C. What is the most efficient level of fixed assets to employ?

D. all of the above

 Question 3 

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 4 

The break-even point can be calculated as:

A. variable costs divided by contribution margin.

B. total costs divided by contribution margin.

C. variable cost times contribution margin.

D. fixed cost divided by contribution margin.