Question 1

Acme Pest Control has sales of $13,500, cost of goods sold of $4,000, selling expenses of $3,500, depreciation of $2,000, interest expense of $2,000, and a tax rate of 34%.
-What is Acme's operating income?

Accepted Answer

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Question 2

What is the survival revenues breakeven based on: cash fixed costs = $400,000 and a variable cost revenue ratio = .65?

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The answer of What is the survival revenues breakeven based...

Question 3

EBDAT is equal to:

Accepted Answer

The answer of EBDAT is equal to:
...

Question 4

Expenses or costs that vary directly with revenues are said to be:

Accepted Answer

Expenses or costs that vary directly with revenues are called variable expenses. They increase or decrease in proportion to the level of sales or production. As the revenue increases, the variable cost increases, and as the revenue decreases, the variable cost decreases. Examples of variable expenses include cost of goods sold, sales commissions, and raw materials.

Question 5

Find the "contribution profit margin" based on the following information:cash fixed costs = $60,000; variable costs = $70,000; and sales = $100,000.

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Question 6

"Net cash burn" occurs when the sum of which of the following items is negative?

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Question 7

Which one of the following is not considered to be an internal operating schedule?

Accepted Answer

The income statement is a financial statement that summarizes a company's revenues and expenses during a specific period of time, usually a month or a year. It is not considered an internal operating schedule, as it does not provide detailed information about the company's day-to-day operations. On the other hand, the cost of production schedule, the cost of goods sold schedule, and the inventories schedule are all internal operating schedules that are used to track the costs and inventory levels of a company's products.

Question 8

According to Appendix A of Chapter 4,NOPAT is defined as:

Accepted Answer

NOPAT (Net Operating Profit After Taxes) is defined as EBIT (Earnings Before Interest and Taxes) times (1 - tax rate). It represents the operating profit generated by a company after accounting for taxes. It is important because it shows the cash available to a company from its core operations. Therefore, option D is the correct answer.

Question 9

Acme Pest Control has sales of $13,500, cost of goods sold of $4,000, selling expenses of $3,500, depreciation of $2,000, interest expense of $2,000, and a tax rate of 34%.
-What is Acme's taxable income and tax expense?

Accepted Answer

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Question 10

Your venture has total assets of $690,net fixed assets of $500,long term debt of $80,and stockholders' equity of $400.What is the amount of your venture's current liabilities?

Accepted Answer

Total assets = Net fixed assets + current assets
$690 = $500 + current assets
Current assets = $190
Total liabilities = Long term debt + current liabilities
Stockholders' equity = Total assets - Total liabilities
$400 = $690 - (Long term debt + current liabilities)
$290 = Long term debt + current liabilities
Current liabilities = Total liabilities - Long term debt 
Current liabilities = $290 - $80 
Current liabilities = $210 
Therefore, the amount of the venture's current liabilities is $210, hence the correct answer is C.

Question 11

Find the "survival revenues" (SR),also known as the EBDAT breakeven)based on the following information:cash fixed costs = $60,000; variable costs = $70,000; and sales = $100,000.

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Question 12

Last year a firm had sales of $200,000.Its cost of goods sold was $75,000,and administrative and marketing expenses were $25,000 each.Depreciation expense was $10,000,while interest expense was $15,000.If the tax rate is 30%,what was the firm's NOPAT last year?

Accepted Answer

The calculation of the firm's NOPAT is as follows:

Operating Income = Sales - Cost of Goods Sold - Administrative Expenses - Marketing Expenses - Depreciation Expense - Interest Expense
Operating Income = $200,000 - $75,000 - $25,000 - $25,000 - $10,000 - $15,000
Operating Income = $50,000

Taxable Income = Operating Income - Interest Expense
Taxable Income = $50,000 - $15,000
Taxable Income = $35,000

Net Income = Taxable Income x (1 - Tax Rate)
Net Income = $35,000 x (1 - 0.30)
Net Income = $24,500

Therefore, the firm's NOPAT last year was $45,500 (i.e., net income before deducting interest expense and taxes).

Question 13

A firm with constant variable costs has a survival revenue breakeven of $375,000.This year it had $250,000 in sales,$100,000 of which was a fixed cost.What are the firm's cash fixed costs?

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Question 14

Acme Pest Control has sales of $13,500, cost of goods sold of $4,000, selling expenses of $3,500, depreciation of $2,000, interest expense of $2,000, and a tax rate of 34%.
-What is Acme's net income?

Accepted Answer

The answer of Acme Pest Control has sales of $13,500,...

Question 15

"Gross earnings" is equal to:

Accepted Answer

Gross earnings is the total revenue received by a company before any deductions are made for expenses. It is calculated by subtracting the cost of production from the net sales. Therefore, option D (net sales - the cost of production) is the best choice. The other options include deductions or adjustments for financial costs or taxes, which are not considered in the calculation of gross earnings.

Question 16

Use the following information to determine the cash fixed costs: Administrative expenses = $200,000; Marketing expenses = $180,000; Depreciation expenses = $100,000; and Interest expenses = $20,000.

Accepted Answer

Cash fixed costs are the costs that must be paid regardless of the level of production or sales. In this case, the only costs that fit that criteria are the administrative expenses and the interest expenses. Therefore, the cash fixed costs are $200,000 + $20,000 = $220,000. None of the answer choices match this amount, but the closest one is B = $400,000, which includes additional costs such as marketing and depreciation expenses that are not fixed.

Question 17

A lease that provides maintenance in addition to financing and is also usually cancelable is called:

Accepted Answer

An operating lease provides maintenance in addition to financing and is also usually cancelable, which makes it different from a capital lease where the lease is noncancelable and includes maintenance. Liability lease, asset lease, and equity lease are not common lease terms.

Question 18

Which of the following is not a category on the statement of cash flows?

Accepted Answer

The categories on the statement of cash flows are cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities. There is no category called "cash flow from equity activities."

Question 19

What is the survival revenues breakeven based on the following: Administrative expenses = $200,000; Marketing expenses = $180,000; Depreciation expenses = $100,000; and Interest expenses = $20,000; and a variable cost revenue ratio = .50?

Accepted Answer

The formula for calculating the survival revenues breakeven is:

Survival revenues breakeven = (Fixed costs + Variable costs) / Contribution margin ratio

Fixed costs = Administrative expenses + Marketing expenses + Depreciation expenses + Interest expenses
Fixed costs = $200,000 + $180,000 + $100,000 + $20,000
Fixed costs = $500,000

Contribution margin ratio = 1 - variable cost revenue ratio
Contribution margin ratio = 1 - 0.50
Contribution margin ratio = 0.50

Survival revenues breakeven = ($500,000 + Variable costs) / 0.50

To calculate the variable costs, we need to use the variable cost revenue ratio:

Variable costs = Variable cost revenue ratio x Total revenues
Variable costs = 0.50 x Total revenues

Now we can substitute the variable costs into the survival revenues breakeven formula:

Survival revenues breakeven = ($500,000 + 0.50 x Total revenues) / 0.50
Survival revenues breakeven = $1,000,000 + Total revenues

Therefore, the survival revenues breakeven is $800,000 ($1,000,000 - $200,000) since the company is already spending $500,000 on fixed costs. This means that the company must generate $800,000 in sales revenue to cover all of its expenses and break even.

Question 20

In breakeven analysis,solving for when EBITDA is equal to zero gives breakeven in terms of:

Accepted Answer

Breakeven analysis involves determining the point at which revenues cover all operational costs, both fixed and variable, without generating profit or loss. When EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is equal to zero, it indicates that the company has just enough revenue to cover its operational costs, thus achieving "survival revenues" or the breakeven point.

Quiz 4: Preparing and Using Financial Statements

Acme Pest Control has sales of $13,500, cost of goods sold of $4,000, selling expenses of $3,500, depreciation of $2,000, interest expense of $2,000, and a tax rate of 34%. -What is Acme's operating income?

What is the survival revenues breakeven based on: cash fixed costs = $400,000 and a variable cost revenue ratio = .65?

EBDAT is equal to:

Expenses or costs that vary directly with revenues are said to be:

Find the "contribution profit margin" based on the following information:cash fixed costs = $60,000; variable costs = $70,000; and sales = $100,000.

"Net cash burn" occurs when the sum of which of the following items is negative?

Which one of the following is not considered to be an internal operating schedule?

According to Appendix A of Chapter 4,NOPAT is defined as:

Acme Pest Control has sales of $13,500, cost of goods sold of $4,000, selling expenses of $3,500, depreciation of $2,000, interest expense of $2,000, and a tax rate of 34%. -What is Acme's taxable income and tax expense?

Your venture has total assets of $690,net fixed assets of $500,long term debt of $80,and stockholders' equity of $400.What is the amount of your venture's current liabilities?

Find the "survival revenues" (SR) ,also known as the EBDAT breakeven) based on the following information:cash fixed costs = $60,000; variable costs = $70,000; and sales = $100,000.

Last year a firm had sales of $200,000.Its cost of goods sold was $75,000,and administrative and marketing expenses were $25,000 each.Depreciation expense was $10,000,while interest expense was $15,000.If the tax rate is 30%,what was the firm's NOPAT last year?

A firm with constant variable costs has a survival revenue breakeven of $375,000.This year it had $250,000 in sales,$100,000 of which was a fixed cost.What are the firm's cash fixed costs?

Acme Pest Control has sales of $13,500, cost of goods sold of $4,000, selling expenses of $3,500, depreciation of $2,000, interest expense of $2,000, and a tax rate of 34%. -What is Acme's net income?

"Gross earnings" is equal to:

Use the following information to determine the cash fixed costs: Administrative expenses = $200,000; Marketing expenses = $180,000; Depreciation expenses = $100,000; and Interest expenses = $20,000.

A lease that provides maintenance in addition to financing and is also usually cancelable is called:

Which of the following is not a category on the statement of cash flows?

What is the survival revenues breakeven based on the following: Administrative expenses = $200,000; Marketing expenses = $180,000; Depreciation expenses = $100,000; and Interest expenses = $20,000; and a variable cost revenue ratio = .50?

In breakeven analysis,solving for when EBITDA is equal to zero gives breakeven in terms of: