Sales of Blistre Autos Are 350,000,variable Cost Is 200,000,fixed Cost

question 48

Multiple Choice

Sales of Blistre Autos are 350,000,variable cost is 200,000,fixed cost is 75,000,tax rate is 20%.Calculate the operating leverage of the company.

• A) 1.00 time
• B) 1.50 times
• C) 2.50 times
• D) 2.00 times

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Definitions:

Goodwill

An intangible asset that arises when a buyer acquires an existing business at a price higher than the fair market value of its net identifiable assets.

Fair Market Value

is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller in the market.

Identifiable Assets

Assets that can be separately identified and valued in a business combination, distinguishable from goodwill.

FIFO System

First-In, First-Out method, an inventory valuation strategy where the oldest items are sold or used first.