According to Your Textbook,which of the Following Statements Describes a Limitation

question 64

Multiple Choice

According to your textbook,which of the following statements describes a limitation associated with break-even analysis?

• A)It is sometimes difficult to ascertain whether a cost is fixed or variable.
• B)It strictly considers demand.
• C)It assumes variable cost per item,which is difficult to calculate.
• D)It can be expressed only as a break-even point in dollar amounts.

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Definitions:

Contribution Margin Ratio

A financial metric that represents the contribution margin as a percentage of total sales, assessing the profitability and efficiency of production.

Operating Income

Income generated from normal business operations, excluding expenses such as taxes and interest payments.

Margin of Safety Percentage

A financial metric indicating the difference between actual sales and break-even sales, expressed as a percentage of actual sales.

Break-even Point

The point at which total costs equal total revenue, meaning there is no profit and no loss.