A Firm Operated at 90% of Capacity for the Past

question 78

Multiple Choice

A firm operated at 90% of capacity for the past year, during which fixed costs were $420,000, variable costs were 40% of sales, and sales were $1,000,000. Operating income was

• A)$180,000
• B)$420,000
• C)$1,080,000
• D)$980,000

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Definitions:

Buy Back

A corporate action in which a company repurchases its own shares from the marketplace.

Take-Over

The acquisition of control over a company, typically by purchasing a majority of its stock.

Employee Compensation

The total amount of financial and non-financial benefits provided to employees in exchange for their work.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the open market.