Answer:
The options are given below:
A. Firm X
B. Firm Y
C. Same variability of operating profits
D. It would depend on tax effect on taxable income
The correct option is B. Firm Y
Explanation:
This is because firm Y has a higher operating leverage than firm X.
<u>Operating Leverage</u> refers to a cost-accounting formula that measures the degree to which a firm can increase operating income by increasing revenue. Operating leverage actually boils down to the analysis of fixed costs and variable costs, and it is highest in companies that have a high fixed operating costs in comparison with variable operating costs. What this means is that this kind of company makes use of more fixed assets. On the other hand, operating leverage is lowest in companies that have a low fixed operating costs when compared with variable operating costs.
Companies with high operating leverage are capable of making more money from each additional sale if they do not have to incur more costs to produce more sales.
Therefore, from the scenario given above, we can conclude that firm Y has a higher operating leverage than firm X, because firm X has lower fixed costs than firm Y, and a higher variable cost than firm Y as well. Hence, firm Y has the potential to make more operating profits from its business activities.
Answer:
Financial
Explanation:
Financial management refers to managing an organization or program's resources to meet it's goals and objectives as quickly as possible by making use of resources to carry out planned activities. A financial management system is the approach employed by an organization to govern its income, expenses and assets with the sole purpose of attaining sustability.
Answer:
A
Explanation:
Economic risk is the risk that macroeconomic conditions would affect the value of investment .
Examples of economic risks are Recession and inflation
Answer:
$4366.67
Explanation:
Given: Asset book value on july 1, year 3= $57800
Salvage value= $5400
Useful life left= 6 years.
Now, computing the depreciation expense under straight line method.
Formula; Depreciation= 
Useful life in months= 
Next, Depreciation expense= 
∴ Monthly depreciation expense= $ 727.77
Depreciation expense for last six months of year 3= 
∴ Depreciation expense for last six month of year 3 is $4366.67.
