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.