20.

If actual sales are $25,000, break-even point in dollars is $15,000, and variable cost is
$12,000, the margin of safety will be:
a. $10,000
b. $40,000
c. $13,000
d. $27,000
Ans: a

21.If actual sales are $50,000, variable cost is $15,000, and margin of safety is $20,000, the
break-even sales will be:
a. $35,000
b. $30,000
c. $65,000
d. $70,000
Ans: b

22.If margin of safety is $5,000, break-even point is $20,000, and fixed cost is $50,000, the
actual sales will be:
a. $15,000
b. $30,000
c. $25,000
d. $45,000
Ans : c
23.if degree of operating leverage is 3, a 15% increase in sales revenue will increase
operating income by:
a. 5%
b. 0.2%
c. 45%
d. 30%
Ans : c

24. If sales are $300,000, variable costs are $120,000, and fixed costs are $80,000,
what is the operating leverage ?
a. 4.0
b. 1.8
c. 0.8
d. 1.2
Ans: b