Question 1

Determine the total operating fixed costs (TOFC) based on the following: administrative expenses = $200,000; marketing expenses = $180,000; depreciation expenses = $100,000; and interest expenses = $20,000.
A)$380,000
B)$400,000
C)$480,000
D)$500,000

Accepted Answer

Total Operating Fixed Costs (TOFC) are calculated by adding up all fixed costs associated with the operation of a business, excluding interest expenses since they are considered financial costs, not operating costs. Therefore, TOFC = administrative expenses + marketing expenses + depreciation expenses = $200,000 + $180,000 + $100,000 = $480,000.

Question 2

Find the NOPAT breakeven revenues (NR) given the following information: total operating fixed costs = $75,000; variable costs = $150,000; and sales = $200,000.]
A)$100,000
B)$240,000
C)$300,000
D)$400,000

Accepted Answer

To calculate NOPAT breakeven revenues (NR), we must first calculate the operating income (OI) at the current sales level of $200,000:
OI = Sales - Variable Costs - Fixed Costs
OI = $200,000 - $150,000 - $75,000
OI = -$25,000

Since the OI is negative, the company is currently not profitable. To find the breakeven NR, we need to solve for the sales level that will result in an OI of zero:
0 = NR - $150,000 - $75,000
NR = $225,000

Therefore, the company needs to achieve $225,000 in sales to break even on a NOPAT basis. The closest answer choice is C, $300,000.

Question 3

Last year, a firm had sales of $200,000. Its cost of goods sold was $75,000; administrative expenses were $25,000; marketing expenses were $25,000; depreciation expense was $10,000; and interest expense was $15,000. If the tax rate is 30%, what was the firm's NOPAT last year?]
A)$19,500
B)$35,000
C)$45,500
D)$52,500

Accepted Answer

NOPAT (Net Operating Profit After Tax) = EBIT (Earnings Before Interest and Taxes) x (1 - tax rate)

We need to calculate EBIT first:

EBIT = Sales - Cost of Goods Sold - Administrative Expenses - Marketing Expenses - Depreciation Expense

EBIT = $200,000 - $75,000 - $25,000 - $25,000 - $10,000 = $65,000

Now we can calculate NOPAT:

NOPAT= EBIT x (1 - tax rate)

NOPAT = $65,000 x (1 - 0.30) = $45,500

Therefore, the answer is C ($45,500).

Quiz 4: Preparing and Using Financial Statements

Determine the total operating fixed costs (TOFC) based on the following: administrative expenses = $200,000; marketing expenses = $180,000; depreciation expenses = $100,000; and interest expenses = $20,000.

Find the NOPAT breakeven revenues (NR) given the following information: total operating fixed costs = $75,000; variable costs = $150,000; and sales = $200,000.]

Last year, a firm had sales of $200,000. Its cost of goods sold was $75,000; administrative expenses were $25,000; marketing expenses were $25,000; depreciation expense was $10,000; and interest expense was $15,000. If the tax rate is 30%, what was the firm's NOPAT last year?]