Reference no: EM1354793

1. The firm's operating breakeven point is the point at which

1. 1. total operating costs equal total fixed costs.
2. 2. EBIT is less than sales.
3. 3. total operating costs are zero.
4. 4. EBIT is zero.

2. A decrease in fixed financial costs will result in ________ in financial risk.

1. 1. a decrease
2. 2. no change
3. 3. an undetermined change
4. 4. an increase

3. If a firm's variable costs per unit increase, the firm's operating breakeven point will

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

4.One function of breakeven analysis is to

1. 1. evaluate the profitability of various sales levels.
2. 2. create profits.
3. 3. describe leverage.
4. 4. determine the amount of financing needed by the firm.

5.________ analysis is a technique used to assess the returns associated with various cost structures and levels of sales.

1. 1. Marginal
2. 2. Breakeven
3. 3. Time-series
4. 4. Ratio

6.Earnings before interest and taxes (EBIT) is a descriptive label for

1. 1. operating profits.
2. 2. net profits before taxes.
3. 3. gross profits.
4. 4. earnings per share.

7.________ costs are a function of time, not sales, and are typically contractual.

1. 1. Variable
2. 2. Fixed
3. 3. Operating
4. 4. Semi-variable

8.The per dollar contribution toward fixed operating costs and profits provided by each dollar of sales is the

1. 1. profit margin.
2. 2. fixed coverage ratio.
3. 3. contribution margin.
4. 4. expense ratio.