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    Accounting and Finance Questions

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    18. Which of the following best describes the a payment for materials purchased
    A. Cash Receipt
    B. Cash Disbursement
    C. Cash Incentive
    D. None of the Above

    19. Hazardous Toys Company produces boomerangs that sell for $8 each and have a variable cost of $7.50. Fixed costs are $15,000. Compute the Break-Even point in units?
    A. 20,000
    B. 35,000
    C. 30,000
    D. 40,000

    20. The Sosa Company products baseball gloves. The company's income statement for 2004 is as follows:

    Sosa Company
    Income Statement
    For the Year Ended December 31, 2004

    Sales (20,000 gloves at $60 each)....................................$1,200,000
    Less: Variable costs (20,000 gloves at $20)........... 400,000
    Fixed cost............................................... ................ 600,000
    _________
    Earning before interest and taxes (EBIT)................. 200,000
    Interest expense............................................................. 80,000
    Earning before taxes (EBT)................................ ........... 120,000
    Income tax expense (30%)................................ ....... 36,000
    __________
    Earning after taxes (EAT).................................. ........... $ 84,000

    Based on the information above, calculate the degree of operating leverage?
    A. 6.67X
    B. 1.67X
    C. 5.00X
    D. 4.00X

    21. Hugh Snore Bedding, Inc., has assets of $400,000 and turns over its assets 1.5 times per year. Return on assets is 12 percent. What is its profit margin (return on sales)?
    A. 1.5%
    B. 8%
    C. 9.5%
    D. 12%

    22. Sales for Ross Pro's Sports Equipment are expected to be 4,800 units for the coming month. The company likes to maintain 10 percent of unit sales for each month in ending inventory. Beginning inventory is 300 units. How many units should the firm produce for the coming month?
    A. 4,800
    B. 5,800
    C. 4,980
    D. 5,980

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