Question 1 Contribution margin represents the amount of sales left over after fi

Question

Question 1

Contribution margin represents the amount of sales left over after fixed costs are paid.

Question 2

The difference between variable cost and fixed cost is that the cost amount fluctuates differently based on how many uses are sold.

Question 3

The "term structure of interest rates" refers to the relationship between yields on debt and their maturities.

Question 4

5 out of 5 points

If we examine the ratio of working capital to sales, we can see that for the last several decades, firms' liquidity has been increasing.

Question 5

5 out of 5 points

One way businesses try to overcome the risk associated with new customers is to access a credit scoring report that will predict the probability of a customer causing credit problems in the future.

Question 6

5 out of 5 points

Finding out who is ultimately responsible for a bad debt can be helped by Dun & Bradstreet's D-U-N-S (Data Universal Number System) that tracks relationships and the ownership of businesses within Dun & Bradstreet's information base.

Question 7

5 out of 5 points

In break-even analysis, the contribution margin is defined as

Question 8

5 out of 5 points

At the break-even point, a firm's profits are

Question 9

5 out of 5 points

Financial leverage deals with

Question 10

5 out of 5 points

The term structure of interest rates is influenced by

Question 11

5 out of 5 points

The belief that investors require a higher return to entice them into holding long-term securities is the viewpoint of the

Question 12

5 out of 5 points

Permanent current assets are not a factor in a manager's decision-making process when all current assets are

Question 13

5 out of 5 points

Generally, the safest and most marketable instrument for short-term investment is

Question 14

5 out of 5 points

The most subjective and also significant segment of the 5 Cs of credit for giving final approval is

Question 15

0 out of 5 points

One of the major cost savings for consumers using automated clearinghouses is

Question 16

0 out of 8 points

If a firm has fixed costs of $30,000, a variable cost per unit of $.75, and a break-even point of 5,000 units, the sales price per unit is _____.

Question 17

0 out of 8 points

If TechCor has fixed costs of $60,000, variable costs of $1.20/unit, a sales price/unit of $7, and depreciation expense of $25,000, what is its cash breakeven in units?

Question 18

0 out of 8 points

If a firm has a sales price per unit of $6.00, a variable cost per unit of $4.00, and a break-even point of 40,000 units, fixed costs are equal to _____.

Question 19

0 out of 8 points

If a firm has fixed costs of $85,000, a variable cost per unit of $10 and sales price per unit of $15, what is the firm’s breakeven point in units?

Question 20

0 out of 8 points

If EBIT equals $200,000 and interest equals $40,000, what is the degree of financial leverage?

Question 21

0 out of 8 points

Samuelson will produce 20,000 units in January using level production. If each unit costs $500 to manufacture, what is the dollar value of ending inventory in January if beginning inventory is 10,000 units and January sales are 15,000?

Question 22

0 out of 8 points

Samuelson has a beginning inventory balance on January 1 of 12,000 units and desires an ending balance of 20% of the next month’s sales. If sales are expected to be 17,000 for January and 20,000 for February, what is the ending balance as of January 31?

Question 23

0 out of 8 points

Riley Co. is considering a short-term or long-term financing plan of $4,000,000 assets. It expects the following one-year interest rates over the next three years: 6.5%, 7.75%, and 9%. The long-term interest rate will be 7.5% during those three years. What will be the difference in interest costs over the three years?

Question 24

0 out of 8 points

Under normal conditions (70% probability), Plan A will produce a $20,000 higher return than Plan B. Under tight money conditions (30% probability), Plan A will produce $100,000 less than Plan B. What is the expected value of return?

Question 25

0 out of 8 points

Genetech has $4,000,000 in assets. It has decided to finance 30% with long-term financing (9% rate) and 70% with short-term financing (7%) rate. Assuming a 40% tax rate, what will its annual after-tax interest costs be?

Question 26

0 out of 9 points

We expect that we can receive annual incremental income after taxes of $25,000, including an adjustment for uncollectible accounts. What is the maximum commitment to A/R that we should be willing to assume if our firm's minimum required after-tax return is 8%?

Question 27

0 out of 9 points

If a company can implement cash management systems and save three days by reducing remittance time and one day by increasing disbursement time based on $2,000,000 in average daily remittances and $2,500,000 in average daily disbursements and its return on freed-up funds is 10%, what is the maximum that it should spend on the system?

Question 28

0 out of 9 points

Massa Machine Tool expects total sales of $60,000. The price per unit is $10. The firm estimates an ordering cost of $25 per order, with an inventory cost of $0.70 per unit. What is the optimum order size?

Question 29

0 out of 9 points

Price Corp. is considering selling to a group of new customers and creating new annual sales of $90,000. Five percent will be uncollectible. The collection cost on all accounts is 3% of new sales, the cost of producing and selling is 80% of sales, and the firm is in the 30% tax bracket. What is the profit on new sales?

Question 30

0 out of 9 points

Waldron Inc. is considering selling to a group of new customers that will bring in credit sales of $24,000 with a return on sales of 5%. The only new investment will be in accounts receivable. Waldron has a turnover ratio of 6 to 1 between sales and accounts receivable. What is Waldron Inc.’s expected return on investment?

Contribution margin represents the amount of sales left over after fixed costs are paid.

Explanation / Answer

Question 1

The correct answer is false.

Contribution margin is nothing but the amount of sales left that is used to pay fixed costs.

Contribution margin = Sales revenue - Variable costs

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