Question
3. Storm Berhad makes surveillance equipment for intelligence organizations. Its sales are RM75,000,000. Fixed costs, including research and development, are RM40,000,000, while variable costs amount
3. Storm Berhad makes surveillance equipment for intelligence organizations. Its sales are RM75,000,000. Fixed costs, including research and development, are RM40,000,000, while variable costs amount to 30 percent of sales. Storm plans an expansion which will generate additional fixed costs of RM15,000,000, decrease variable costs to 25 percent of sales, and permit sales to increase to RM100,000,000. What is Storm's degree of operating leverage at the new projected sales level?
A. 3.75
B. 4.20
C. 3.50
D. 4.67
4.The JasaKita Berhad manufactures ladies shoes that are sold through discount houses. The shoes are sold for RM20 each pair; the fixed costs are RM110,000 for up to 30,000 pairs of shoes; variable costs are RM13 per pair of shoes. What is the firm's breakeven point in units sold?
A. 30,000 pairs of shoes
B. 15,714 pairs of shoes
C. 8,462 pairs of shoes
D. 5,500 pairs of shoes
5. According to the residual theory of dividends:
A. dividends are a residual after investment financing needs have been met.
B. earnings remaining after payment of preferred stock dividends should be paid to common stockholders
C. dividend payments are a constant percentage of earnings per share
D. a dividend is the residual above the payout ratio
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