You Would Like to Know the Minimal Level of Sales

question 354

Multiple Choice

You would like to know the minimal level of sales needed for a project to be accepted based on net present value. You should compute the sales quantity needed for the:

• A) Degree of operating leverage to equal zero.
• B) Net income to equal zero.
• C) Operating cash flow to equal zero.
• D) Discounted payback period to equal the life of the project.
• E) Payback period to equal the life of the project.

---

Definitions:

Raw Materials

Basic substances in their natural, modified, or semi-processed state, used as inputs for production.

Joint Operation

A business activity undertaken by two or more parties who maintain joint control and share both the assets and liabilities related to the operation.

Accounting Entry

A record that represents a transaction in the accounting books of a company.

Joint Control

Joint control exists in a business arrangement when more than one party has the power to govern the financial and operating policies of an economic activity to benefit from it.