1. As a company's sales move farther from its breakeven point, one would expect the DOL (Degree of Operating Leverage) to?

Increase

Decreases

No effect

Vary proportionally to changes in cost driver

2. In describing the function Y=a + bx, which of the following is correct?

Y is the independent variable

a is the variable rate

In the high low method, "b" equals the change in activity divided by change in cost.

None of the above

3. A higher degree of operating leverage compared with industry average implies that the firm:

has profits that are more sensitive to changes in variable cost

is more profitable

less risky

None of the above

4. Operating income using direct costing as compared to absorption costing would be higher

When the quantity of beginning inventory is more than the quantity of ending inventory

When the quantity of beginning inventory equals the quantity of ending inventory

When the quantity of beginning inventory is less than the quantity of ending inventory

Under no circumstances