If Fixed Expenses Increase by $10,000 Per Year, Then the Sales

question 188

True/False

If fixed expenses increase by $10,000 per year, then the sales needed to break even will generally increase by more than $10,000.

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Definitions:

Least-squares Regression

A statistical method used to determine a line of best fit by minimizing the sum of the squares of the differences between observed and predicted values.

Mixed Cost

Costs that have both fixed and variable components and change in total with the level of activity, but not proportionately.

Machine-hour

A metric that quantifies the number of hours a machine is utilized to manufacture products during a specified timeframe.

High-low Method

An approach in managerial accounting that approximates variable and fixed costs by examining the maximum and minimum levels of activity.