Time Fames for Monitoring Operational Performance Should Look Across a Full

question 6

Multiple Choice

Time fames for monitoring operational performance should look across a full year because:

• A) A year long analysis takes into account seasonal variations in volumes
• B) Monthly analysis provides a less variable average
• C) Comparison with quarterly averages will hide occasional errors in management
• D) None of the above

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Definitions:

Break-even Point

The level of sales at which profit is zero.

Degree of Operating Leverage

A ratio that measures how a percentage change in sales will affect profits, highlighting the impact of fixed costs on earnings.

Break-even Point

The level of sales at which total revenues equal total costs, resulting in no profit or loss for the business.

Variable Expenses

Costs that change in proportion to the activity or volume of operations in a business, such as raw materials and labor costs.