75 % 65 % Which of the following statements is not true? 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. When a company’ s sales revenue is increasing, high operating leverage is good because it means that profits will increase rapidly. Companies that have higher fixed costs relative to variable costs have higher operating leverage. Operating leverage refers to the extent to which a company’ s net income reacts to a given change in sales. Which of the following will not result in an unfavorable controllable margin difference? Sales under budget; costs under budget Sales exceeding budget; costs under budget Sales under budget; costs over budget Sales exceeding budget; costs over budget 5 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( shortterm)……………………………………………….. 56,000 Property, plant, and equipment ……………………………………….. 1,340,000 Prepaid insurance ……………………………………………………………. 2, 000 $ 370,000 $ 332,000 $ 326,000 $ 284,000 6 Miller Manufacturing’ s degree of operating leverage is 1.5. Warren Corporation’ s degree of