In its first year of operations, a firm had P50,000 of fixed operating costs. it sold 10,000 units at a P10 unit price and incurred variable costs of P4 per unit. If all prices and costs will be the same in the second year and sales are projected to rise to 25,000 units, what will the degree of operating ieverage (the extent to which fixed costs are used in the firm's operations) be in the second year? A. 1.5 В. 3.0 С. 6.0 D 1.2* Calculate the required rate of return for Apolio, Inc., assuming that investors expect a 5 percent rate of inflation rate in the future. The real risk-free rate is equal to 3 percent and the market risk premium is 5 percent Apollo has a beta of 2.0 percent, and its realized rate of return has averaged 15 percent over the last 5 years. A. 15% B. 16% C. 17% D. 18%*

In its first year of operations, a firm had P50,000 of fixed operating costs. it sold 10,000 units at a P10 unit price and incurred variable costs of P4 per unit. If all prices and costs will be the same in the second year and sales are projected to rise to 25,000 units, what will the degree of operating ieverage (the extent to which fixed costs are used in the firm's operations) be in the second year? A. 1.5 В. 3.0 С. 6.0 D 1.2* Calculate the required rate of return for Apolio, Inc., assuming that investors expect a 5 percent rate of inflation rate in the future. The real risk-free rate is equal to 3 percent and the market risk premium is 5 percent Apollo has a beta of 2.0 percent, and its realized rate of return has averaged 15 percent over the last 5 years. A. 15% B. 16% C. 17% D. 18%*

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 9E: Gelbart Company manufactures gas grills. Fixed costs amount to 16,335,000 per year. Variable costs...

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