In Breakeven Analysis, Once All Fixed Costs Have Been Covered

question 215

True/False

In breakeven analysis, once all fixed costs have been covered, additional sales will generate per-unit profits equal to the difference between the selling price and the variable cost of each unit.

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Definitions:

Earnings Retention Rate

The portion of net income that is retained by the company rather than distributed to its shareholders as dividends.

Rate Of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.

Discontinued Operations

Components of a business that have been disposed of or are being held for sale, separate from continuing operations.

Transitory Component

Temporary fluctuations in financial or economic data that do not reflect long-term trends and are expected to revert over time.