HW_11

9. Tuttori, Inc. (TI) provides instructional services to its customers. TI charges $200 per student. The Company expects to serve 500 students during the coming year. All of the Company's expenses are fixed. Total annual fixed costs are projected to be $60,000. If the estimated number of students increase by 10%, net income will increase by:

a- 10%.

b- 30%.

c- 25%.

d- 20%.

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10. Tuttor, Inc. (TI) provides instructional services to its customers. TI charges $200 per student. The Company expects to serve 500 students during the coming year. All of the Company's expenses are fixed. Total annual fixed costs are projected to be $60,000. If the estimated number of students decreases by 10%, net income will

a- increase by 25%.

b- decrease by 10%.

c- decrease by 25%.

d- increase by 10%.

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14. The amount of net income determined for an accounting period will be the same regardless of whether the income statement is prepared under a contribution margin format used in managerial accounting or the product costing format use in financial accounting. This statement is

a- true.

b- false.

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17. Assume that a company incurs a mixture of fixed and variable product costs, and that all of its operating expenses are fixed. Finally, assume that the company earns a profit by making and selling 1,000 units of product. Under these conditions

a- the contribution margin will be greater than the gross margin.

b- the contribution margin will be lower than the gross margin.

c- the contribution margin will be equal to the gross margin.

d- The answer cannot be determined from the information provided.

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19. As compared to companies with low operating leverage, companies with high operating leverage have

a- more opportunity and more risk.

b- more opportunity and less risk.

c- less risk and less opportunity.

d- The answer cannot be determined from the information provided.

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20. The magnitude of operating leverage can be determined by which of the following formulas?

a- Net income Gross margin.

b- Gross margin Net income

c- Net income Contribution margin

d- Contribution margin Net income