Figure 4-1

question 1

Multiple Choice

Figure 4-1. Foster Company makes power tools.The budgeted sales are $420,000,budgeted variable costs are $147,000,and budgeted fixed costs are $227,500.
Refer to Figure 4-1.What is the variable cost ratio?

• A)54%
• B)35%
• C)89%
• D)19%
• E)50%

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Definitions:

Long-Term Debt

Debt obligations that are due in more than one year, used by businesses and governments to finance their operations.

Common Shares

Common Shares are units of ownership in a company that entitle the shareholders to vote at shareholders' meetings and receive dividends.

EBITDA

Earnings before interest, taxes, depreciation, and amortization.

Financial Strength

A measure of a company’s ability to meet its financial commitments, indicating its overall financial stability.