Multiple choice

Question 1

A firm's break-even point will rise if:

A. fixed costs decrease.

B. contribution margins increase.

C. price per unit rises.

D. variable cost per unit rises.

Question 2 

Which of the following is concerned with the change in operating profit as a result of a change in volume?

A. Financial leverage

B. Break-even point

C. Operating leverage

D. Combined leverage

Question 3 

Cash breakeven analysis:

A. is helpful in analyzing the short-term outlook of the firm, particularly when it is in trouble financially.

B. is important when analyzing long-term profitability.

C. includes depreciation expense as a fixed cost when calculating the degree of financial leverage.

D. none of the above

Question 4

The degree of operating leverage may be defined as:

A. the percent change in operating income divided by the percent change in unit volume.

B. Q (P-VC) divided by Q (P-VC) - FC.

C. S - TVC divided by S - TVC - FC.

D. all of the above.