For a Capital Intensive, Automated Company the Break-Even Point Will

question 318

True/False

For a capital intensive, automated company the break-even point will tend to be higher and the margin of safety will be lower than for a less capital intensive company with the same sales.

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Definitions:

Residual Income

The net income an investment or project generates above the minimum required rate of return.

Required Rate Of Return

The minimum return an investor expects to achieve from an investment, given its risk level.

Responsibility Accounting

An accounting system that collects and reports planned and actual accounting information about the inputs and outputs of responsible parties.

Manager Control

The processes and procedures implemented by management to ensure that the organization's goals and objectives are achieved efficiently.