The difference between the actual cost
14. The difference between the actual cost incurred and the standard cost is called the:
Select one:
a. Flexible variance.b. Price variance.c. Cost variance.d. Controllable variance.e. Volume variance.
21. Which of the following is the correct interpretation of a degree of operating leverage of 5?
Select one: a. Operating leverage of 5 means that sales can decrease by 5% before the firm’s current level of sales will hit the break-even point. b. Operating leverage of 5 means that if sales increase by 5% the firm will hit its break-even point. c. Operating leverage of 5 means that if sales increase by 5%, there will be a 25% increase in the firm’s pretax profit. d. Operating leverage of 5 measures the degree of debt employed by the firm’s debt structure. e. Operating leverage of 5 means that the company would need to increase sales by 5 times in order to hit its break-even point.
