1. A payback period must always be less than one year.

True

False

2. A long payback period, perhaps over ten years, for an investment means the investment is high risk and may not be approved by the company's senior management that sets the investment policy.

True

False

3. For a business that sells merchandise, the sales price per unit minus the variable cost per unit, tells us what for each unit sold?

A) Gross profit margin

B) Operating profit

C) Net income

4. Human resource managers use operating leverage when they make their departments more cost-effective by:

A) use all temporary staff to fill their jobs.

B) substituting fixed costs for variable costs.

C) only incur variable costs.