Which of the Following Is Not a Limitation of Breakeven

question 26

Multiple Choice

Which of the following is not a limitation of breakeven analysis: breakeven analysis assumes that:

• A)costs and income have a linear relationship over the relevant range,but this will not be true if a business gives volume discounts for sales
• B)if the business has multiple products,the sales mix remains constant over time,but this will not be true except in the very short term
• C)the number of units produced equals the number sold,but this is not true except in very limited situations
• D)none of the above

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Definitions:

Percentage-of-Completion

An accounting method used to recognize revenues and expenses of long-term contracts as a percentage of work completed during the period.

Revenue Recognition

The accounting principle defining the specific conditions under which revenue is recognized or recorded.

Tax Havens

Countries with no or low corporate taxes.

Cost of Capital

The rate of return a company must earn on its investment projects to maintain its market value and attract funds.