Use the Table for the Question(s)below

question 75

Multiple Choice

Use the table for the question(s) below.

-Refer to the balance sheet above.The change in Luther's quick ratio from 2005 to 2006 is closest to:

• A)a decrease of 0.10
• B)an increase of 0.10
• C)a decrease of 0.15
• D)an increase of 0.15

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Definitions:

Unit Contribution Margin

The measured profit that each unit sold contributes toward fixed costs and profit, calculated by subtracting variable costs from the sales price per unit.

Operating Income

Earnings before interest and taxes (EBIT), which represents the profit a company earns from its core operations.

Fixed Costs

Overhead expenses that remain constant regardless of the volume of activity or production levels within a company.

Cost-volume-profit Analysis

An accounting tool used to determine the effects of changes in costs and volume on a company's profits.