What is operating leverage? The degree of operating leverage is 2.75. What does this mean?
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Operating leverage predicts the effects that fixed costs have on changes in operating income when sales volume changes. If a company has a degree of operating leverage of 2.75, then a percentage change in sales will have 2.75 times the percentage change in profits. For example, if sales increase by 10%, then profits will increase by 27.5% (2.75 x 10%).
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Which of the following is not an advantage of using sales promotions?
A) provides a tangible incentive to buyers B) provides accountability to marketing managers C) enables company to build its database D) builds long-term brand awareness E) develops relationship with customers
Which of the following statements is true regarding codes of ethics?
A. Most organizations have codes of ethics. B. Most domestic organizations, but very few global organizations, have codes of ethics. C. Most global organizations, but very few domestic organizations, have codes of ethics. D. Very few organizations have codes of ethics but they are becoming more popular.
The debt to equity ratio of four companies is given below.
Which of the following companies has the greatest financial risk?
A) Lewis, Inc.
B) Jackson, Inc.
C) Jones Corp.
D) Roberts Corp.
On January 1, 2016, a company disposed of equipment for $16,200 cash that had cost $35,000, a salvage value of $5,000, and a useful life 10 years. The double-declining-balance depreciation method was used. On December 31, 2015, accumulated depreciation was $20,664. Prepare a journal entry to record the disposal of the equipment.
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