What Is the Purpose of Using Break-Even Analysis When Attempting

question 136

Multiple Choice

What is the purpose of using break-even analysis when attempting to set prices?

• A) To determine the total costs of the product
• B) To show the cost, volume, and profit relationships
• C) To compare demand and supply
• D) To reflect the markup needed to make a profit
• E) To show the costs which must be considered in setting prices

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Definitions:

Direct Materials Used

The actual amount of raw materials consumed in the production process of goods.

Work in Process Inventory

Inventory that includes all unfinished goods being manufactured at a given time.

Merchandise Inventory

Goods and products that a retailer, wholesaler, or distributor holds for the purpose of resale to customers.

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been sold.