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Accounting and Finance Questions 18

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Accounting and Finance Questions

18. Which of the following best describes the a payment for materials purchased
A. Cash Receipt
B. Cash Disbursement
C. Cash Incentive
D. None of the Above

19. Hazardous Toys Company produces boomerangs that sell for $8 each and have a variable cost of $7.50. Fixed costs are $15,000. Compute the Break-Even point in units?
A. 20,000
B. 35,000
C. 30,000
D. 40,000

20. The Sosa Company products baseball gloves. The company's income statement for 2004 is as follows:

Sosa Company
Income Statement
For the Year Ended December 31, 2004

Sales (20,000 gloves at $60 each)....................................$1,200,000
Less: Variable costs (20,000 gloves at $20)........... 400,000
Fixed cost............................................... ................ 600,000
_________
Earning before interest and taxes (EBIT)................. 200,000
Interest expense............................................................. 80,000
Earning before taxes (EBT)................................ ........... 120,000
Income tax expense (30%)................................ ....... 36,000
__________
Earning after taxes (EAT).................................. ........... $ 84,000

Based on the information above, calculate the degree of operating leverage?
A. 6.67X
B. 1.67X
C. 5.00X
D. 4.00X

21. Hugh Snore Bedding, Inc., has assets of $400,000 and turns over its assets 1.5 times per year. Return on assets is 12 percent. What is its profit margin (return on sales)?
A. 1.5%
B. 8%
C. 9.5%
D. 12%

22. Sales for Ross Pro's Sports Equipment are expected to be 4,800 units for the coming month. The company likes to maintain 10 percent of unit sales for each month in ending inventory. Beginning inventory is 300 units. How many units should the firm produce for the coming month?
A. 4,800
B. 5,800
C. 4,980
D. 5,980