A Cause-And-Effect Diagram Helps Identify the Source of a Problem

question 86

True/False

A cause-and-effect diagram helps identify the source of a problem.

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Definitions:

Break-Even Point

The level of sales at which total revenues equal total expenses, resulting in neither profit nor loss.

Variable Costs

Expenses that fluctuate in direct proportion to changes in levels of production or sales, such as materials and labor.

Fixed Costs

Expenses that do not change with the level of production or sales volumes, remaining constant regardless of the company's activity levels.

Margin Of Safety

The difference between actual sales and the break-even point. It measures how much sales can fall before a business incurs a loss.