The Following Events Occurred Last Year at Taylor Company

question 41

Multiple Choice

The following events occurred last year at Taylor Company: Based on the above information, the net cash flows from investing activities for the year on the statement of cash flows would be

• A) ($15,000).
• B) ($21,000).
• C) ($7,000).
• D) ($37,000).

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Definitions:

Fixed Cost

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.

Margin of Safety Percentage

A metric that measures how much sales can drop before a business reaches its break-even point, typically expressed as a percentage.

Variable Expenses

Costs that vary directly with the level of production or business activity.

Contribution Margin

The amount by which sales revenue exceeds variable costs. It is used to cover fixed costs and generate profit.