A Firm Has Net Sales of $65,000,operating Expenses of $21,300,depreciation

question 39

Multiple Choice

A firm has net sales of $65,000,operating expenses of $21,300,depreciation of $5,000,cost of goods sold of $36,500,and interest expense of $4,500.What is the operating margin?

• A) -2.8 percent
• B) 2.6 percent
• C) 3.4 percent
• D) 9.2 percent
• E) 10.3 percent

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Definitions:

Variable Overhead

This consists of expenses that vary with production output, including costs not directly tied to manufacturing but essential for operation.

Labour Efficiency Variance

The difference between the actual labor hours used and the standard labor hours set for the production level achieved.

Incremental Cost Approach

A decision-making process focusing on the costs that change with the level of production or the introduction of a new process.

Net Present Value

The difference between the present value of an investment project’s cash inflows and the present value of its cash outflows.