A Firm with 60 Percent of Sales Going to Variable

question 96

Multiple Choice

A firm with 60 percent of sales going to variable costs,$1.5 million fixed costs,and $500,000 depreciation would show what accounting profit with sales of $3 million? Ignore taxes.

• A) Zero loss
• B) $370,000 loss
• C) $666,667 Loss
• D) $800,000 loss

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Definitions:

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, usually expressed in years.

Bond Duration

A measure of the sensitivity of a bond's price to changes in interest rates, expressed in years.

Time To Maturity

The remaining duration until the expiration date of a financial instrument, when its principal is due to be paid to holders.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the bond's face value, and paid to bondholders at specified intervals until maturity.