Lincoln Lodging Inc

question 6

Multiple Choice

Lincoln Lodging Inc.estimates that if its sales increase 10.00% then its net income will increase 14.50%.The company's EBIT equals $2.4 million,and its interest expense is $400,000.The company's operating costs include fixed and variable costs.What is the level of the company's fixed operating costs? Do not round your intermediate calculations.

• A) $480,000
• B) $455,000
• C) $400,000
• D) $500,000
• E) $420,000

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Definitions:

Prototypes

A cognitive representation of a typical member of a category, used to enhance memory and identification by providing examples that epitomize common features within that category.

Representativeness Heuristic

A thinking strategy based on how closely a new object or situation is judged to resemble or match an existing prototype of that object or situation.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a given person's mind when evaluating a specific topic, concept, method, or decision.

Additive Strategy

A decision-making approach in which each alternative is rated on each of the important factors affecting the decision and the alternative with the highest overall rating is chosen.