If a Firm's Fixed Costs Are Exactly Equal to Its

question 352

Multiple Choice

If a firm's fixed costs are exactly equal to its depreciation expense, and both are greater than zero, then at its accounting break-even point the DOL _______________.

• A) Is equal to one.
• B) Is equal to two.
• C) Is greater than two.
• D) Is undefined since you can't divide by zero.
• E) Cannot be determined without more information.

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Definitions:

Crash Cost

Additional costs incurred to complete a project much faster than originally planned, often leading to increased expenses.

Normal Duration

The standard, expected amount of time taken to complete a task or process under normal conditions.

Crashing

A project management technique used to reduce the time for a project by assigning more resources to critical tasks.

CPM Network

Critical Path Method Network; a project management tool used to identify the longest sequence of dependent tasks and estimate the minimum completion time for a project.