9)Which of the following statements isnottrue?

1. Companies that have higher fixed costs relative to variable costs have higher operating leverage.
2. Operating leverage refers to the extent to which a company's net income reacts to a given change in sales.
3. When a company's sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly.
4. When a company's sales revenue is decreasing, high operating leverage is good because it means that profits will decrease at a slower pace than revenues decrease.

11) Miller Manufacturing's degree of operating leverage is 1.5. Warren Corporation's degree of operating leverage is 3. Warren's earnings would go up (or down) by ________ as much as Miller's with an equal increase (or decrease) in sales.

1. 2 times
2. 4.5 times
3. 1.5 times
4. 1/2 times

13) Hollis Industries produces flash drives for computers, which it sells for $20 each. Each flash drive costs $13 of variable costs to make. During April, 1,000 drives were sold. Fixed costs for March were $2 per unit for a total of $1,000 for the month. How much is the contribution margin ratio?

1. 65%
2. 35%
3. 25%
4. 75%

15) The Mac Company has four plants nationwide that cost $350 million. The current fair value of the plants is $300 million. The plants will be reported as assets at:

1. $600 million.
2. $300 million.
3. $700 million.
4. $350 million.

17) Based on the following data, what is the amount of working capital?

Accounts payable.................................................................$64,000

Accounts receivable..............................................................114,000

Cash..................................................................................70,000

Intangible assets..................................................................100,000

Inventory............................................................................ 138,000

Long-term investments...........................................................160,000

Long-term liabilities.................................... ...........................200,000

Short-term investments............................................................80,000

Notes payable (short-term)........................................................56,000

Property, plant, and equipment...............................................1,340,000

Prepaid insurance......................................................................2,000

1. $326,000
2. $332,000
3. $284,000
4. $370,000