5 Sable Co. sells office stationery for $12.00 per package. The paper's variable cost per package is $7.00. Sable has fixed operating costs of $13,000 and fixed financing (interest) costs of $16,000. On average, Sable sells 10,000 units. What is Sables's degree of total leverage (DTL)? A. 114% B. 130% C. 203% D. 238% 6 Snickerdoodle Co. has EBIT of $50,000 and total financing (interest) cost of $14,000. Snickerdoodle's Degree of Financial Leverage (DFL) is closest to: A. 215% B. 139% C. 109% D. 123% 7 Riley Co. has a DOL of 140% and a DFL of 113%. If sales decrease by 12%, what is the expected percentage change in net income? A. Net income will decrease by 19%. B. Net income will decrease by 25%. C. Net income will stay the same. D. Net income will increase by 25%. 8 Mary buys a gift card from Chipotle. How early can Chipotle recognize the revenue from Marys transaction? A. Immediately upon purchase of the gift card. B. When the gift card is redeemed by the customer. C. Only after the gift card expires. D. Ratably over time, regardless of when the gift card is redeemed by the customer. 9 Initial franchise fees should be recorded as revenue by the franchisor: A. in accordance with the franchise agreement. B. when cash is received from the franchisee. C. when all distinct performance obligations relating to the sale have been performed. D. during the year the franchise agreement is signed. 10 Under a consignment arrangement, revenue is recognized when the consigned goods: A. are manufactured. B. are shipped and delivered to the consignee. C. sold to a third party by the consignee. 11 You buy goods for $3,000 and receive a voucher for $500 off your next purchase within 30 days. Based on historical experience, the vendor estimates that 90% of its customers use these vouchers. How much revenue should the vendor recognize immediately at the time of your original purchase? A. $3,000 B. $2,610 C. $3,450 D. $2,500 12 Which of the following does NOT indicate the transfer of control over goods and services that comprise the performance obligation on the part of the seller? A. The customer has paid the firm. B. The customer has a legal obligation to pay the firm. C. The customer has legal title (in the case of goods). D. The customer has physical possession of the goods. E. The customer is subject to the risks and rewards of ownership.

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