42 -

The margin of safety is:

	The excess of sales over variable expenses.
	The excess of sales over fixed expenses.
	The excess of sales over the break-even volume of sales.
	The excess of net operating income over actual net operating income.

44 -

The Snape Corporation has the following data for 2014: Selling price per unit$10 Variable costs per unit$6 Fixed costs$20,000 Units sold12,000 Snapes 2014 operating leverage is:

0.50

2.00

4.00

1.71

46 - In calculating the break-even point for a multi-product company, which of the following assumptions are commonly made? 1)Sales volume equals production volume 2)Variable expenses are constant per unit. 3)A given sales mix is maintained for all volume changes.

	1 and 2
	1 and 3
	2 and 3
	1,2 and 3

47 - Which one of the following statements about difficulties in cost estimation is true?

	Changes in the companys production technology make estimating the companys production costs easier
	The shorter the time period, the higher the probability of inappropriately matching activity and cost
	The stronger the economy, the harder it is to accurately match activity and cost
	When prices of a companys raw materials or labor are rapidly increasing, cost estimations based on previous periods will overestimate future costs

48 -

At its current level of sales, a company has a degree of operating leverage of 6. This means that a 10% increase in sales would result in a:

	6% Increase in before-tax profit
	10% Increase in before-tax profit
	60% Increase in contribution margin
	60% Increase in before-tax profit