Which of the Following Is Not a Step in Calculating

question 15

Multiple Choice

Which of the following is not a step in calculating the breakeven point?

• A)Put everything into "constant" form - sales price per unit, variable cost per unit, total fixed cost.
• B)Subtract fixed cost from sales revenue.
• C)Calculate the contribution margin per unit.
• D)Solve by dividing total fixed cost by contribution margin per unit.

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Definitions:

Cost Function

A mathematical relation that describes how production costs vary with changes in the quantity of output produced.

Profit-Maximizing Output

The quantity of production that generates the highest possible profit for a firm, determined by the intersection of marginal cost and marginal revenue.

Price Equals Marginal Cost

This principle suggests that in a competitive market, firms set prices equal to their marginal cost of production, achieving economic efficiency.

Profit Maximization

The process or strategy aimed at achieving the highest possible profit where total revenue exceeds total costs.