1. What is the fixed-cost expenditure for a firm with a DOL of 4.5 that generates pretax profits of $1 million and has $600,000 in depreciation expense?
a) $1.1million
b) $2.5million
c) $2.9million
d) $3.3million
2. Target costing is:
A. a method of cost planning to reduce only manufacturing costs to targeted levels.
B. the process of examining each component of a product to determine whether its cost can be reduced.
C. the process of managing R&D and design costs.
D. a system that focuses on reducing costs during the manufacturing cycle.