Reference no: EM1354787

1. A firm has fixed operating costs of $25,000, a per unit sales price of $5, and a variable cost per unit of $3. What is its operating breakeven point if it desires net operating income of $10,000, not $0 (zero)?

1. 1. 25,000 units.
2. 2. 17,500 units.
3. 3. 15,000 units.
4. 4. 12,500 units.

2. The three basic types of leverage are

1. 1. operating, production, and total.
2. 2. operating, financial, and total.
3. 3. operating, production, and financial.
4. 4. production, financial, and total.

3.________ costs are a function of volume, not time.

1. 1. Variable
2. 2. Fixed financial
3. 3. Fixed operating
4. 4. Semi-variable

4.A firm has fixed operating costs of $10,000, the sale price per unit of its product is $25, and its variable cost per unit is $15. The firm's operating breakeven point in units is ________ and its breakeven point in dollars is ________.

1. 1. 400; $10,000
2. 2. 250; $ 6,250
3. 3. 1,000; $25,000
4. 4. 667; $16,675

5.If a firm's fixed financial costs decrease, the firm's operating breakeven point will

1. 1. change in an undetermined direction.
2. 2. decrease.
3. 3. remain unchanged.
4. 4. increase.

6.A firm has fixed operating costs of $525,000, of which $125,000 is depreciation expense. The firm's sales price per unit is $35 and its variable cost per unit is $22.50. The firm's cash operating breakeven point in units is

1. 1. 52,000.
2. 2. 32,000.
3. 3. 42,000.
4. 4. 23,330.

7. A major assumption of breakeven analysis and one which causes severe limitations in its use is that

1. 1. fixed costs really are fixed.
2. 2. total revenue is nonlinear.
3. 3. revenues and operating costs are linear.
4. 4. all costs are really semi-variable.