The Only Difference Between Joe's and Moe's Is That Joe's

question 253

Multiple Choice

The only difference between Joe's and Moe's is that Joe's has old, fully depreciated equipment. Moe's just purchased all new equipment which will be depreciated over eight years. Assuming all
Else equal:

• A) Joe's will have a lower profit margin.
• B) Joe's will have a lower return on equity.
• C) Moe's will have a higher net income.
• D) Moe's will have a lower profit margin.
• E) Moe's will have a higher return on assets.

Understand the effect of changes in sales volume on costs and profitability.

Determine the operating income under different sales and cost scenarios.

Analyze the impact of changes in fixed and variable costs on the break-even point.

Understand and calculate the impact of sales volume changes on operating income.