A Firm Has Fixed Operating Costs of $175,000, Total Sales

question 69

Multiple Choice

A firm has fixed operating costs of $175,000, total sales revenue of $3,000,000 and total variable costs of $2,250,000. The firm's degree of operating leverage is ________.

• A) 0.77
• B) 1.30
• C) 0.81
• D) 4.29

Distinguish different types of organizational structures and their characteristics.

Know the principles of organizing and the process of organizing within a company.

Differentiate between line authority, staff authority, and functional authority.

Understand the concepts of centralized and decentralized authority and their implications in organizational management.

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts in preparation for the next accounting period.

Financial Statements

Formal records that outline the financial activities and condition of a business, organization, or individual, commonly including the balance sheet, income statement, and cash flow statement.

Balance Sheet Columns

Columns typically found in a balance sheet used to report a company's financial position at a certain point in time, showing assets, liabilities, and shareholders' equity.

Income Statement Columns

The segments in an income statement (profit and loss statement) that categorize financial data into revenues, expenses, and net income over a specific period.