Jill Owns a Retail Business by Herself and Was Sued

question 29

Multiple Choice

Jill owns a retail business by herself and was sued by a customer who fell in the store.The customer claimed the business was negligent in caring for its floors.Which statement best describes Jill's potential liability?

• A)Jill has no potential liability to the customer.
• B)Jill can be held personally liable to the customer since she is the owner.
• C)Jill can only be liable to the amount she initially invested in the business.
• D)Jill cannot be held personally responsible; the woman's insurance must pay for the claim.

Understand the concept of break-even analysis and its application in determining the quantity of sales needed to achieve a target net operating income.

Comprehend the relationship between price changes and net operating income in a cost-volume-profit (CVP) context.

Gain insight into target costing and pricing strategies, including value-based pricing, cost-plus pricing, and the impact of desired return on investment on pricing decisions.

Analyze the effects of price adjustments on sales volume, net operating income, and unit sales, taking into account fixed and variable costs.

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Definitions:

Contribution Margin Ratio

A measurement that shows how much of a company's revenue is available to cover fixed expenses and generate profit after variable costs are covered.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance premiums.

Profit Ratio

A financial metric that measures the amount of profit generated by a business relative to aspects of its operations, such as sales.

Break-even Sales

The amount of revenue required to cover total fixed and variable costs, resulting in a profit of zero.