Which of the Following Is a Question That Should Not

question 69

Multiple Choice

Which of the following is a question that should not be sidestepped when buying a business?

• A)Where should the business be located?
• B)What types of customers does this store attract?
• C)What pricing strategy should the firm use?
• D)Are there hidden problems that exist in the operation?

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Definitions:

Break-even Sales

The amount of revenue needed to cover total costs, both fixed and variable, indicating the point at which a company neither makes a profit nor incurs a loss.

Margin of Safety

The difference between actual or projected sales and the sales level necessary to break even, as a buffer against uncertainty.

Contribution Margin

The difference between sales revenue and variable costs of a product or service, indicating how much contributes towards covering fixed costs and profit.

Variable Costs

Costs that vary in direct proportion to changes in the level of production or sales.