How Much Depreciation Expense Exists in a Firm That Has

question 116

Multiple Choice

How much depreciation expense exists in a firm that has a break-even level of revenues of $2 million, fixed costs of $400,000, and a 60 percent ratio of variable costs to sales?

• A)$144,000
• B)$266,667
• C)$400,000
• D)$666,667 $2,000,000 =
• 800,000 = 400,000 + Dep

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Definitions:

Influential Observations

Data points that have a significant impact on the result of a statistical analysis, potentially skewing the outcome.

Simple Linear Regression

A method in statistics that models the relationship between two variables by fitting a linear equation to the observed data.

Least-squares Regression Line

A straight line that best models the relationship between a dependent and independent variable by minimizing the sum of the squares of the vertical distances of the points from the line.

MPG

Miles Per Gallon, a measure of fuel efficiency used in the United States to indicate how many miles a vehicle can travel per gallon of fuel.