Find how much is the company fixed costs

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Problem 1. As a company's sales move farther from its break- even point, one would expect the degree of operating leverage to

a. increase

b. decrease

c. remained unchanged

d. vary in direct proportion to changes in the activity level.

Problem 2. If sales increase from P800,000 to P900,000, and if the degree of operating leverage is 5, one would expect profit to increase by

a. 62.5%

b. 12.5%

c. 5.0%

d. 2.5%

Problem 3. A company has an operating leverage factor of 4,. When its sales increased to P500,000, its profit before tax increased by 100%. Its variable cost ratio is 40%. How much is the company's fixed costs?

a. P100,000

b. P240,000

c. P180,000

d. P120,000

Reference no: EM132709854

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