CVP Analysis for Revenue and Cost Planning Has the Primary

question 76

Multiple Choice

CVP analysis for revenue and cost planning has the primary objective of:

• A) Maximizing revenue.
• B) Minimizing costs.
• C) Both revenue maximization and cost minimization.
• D) Achieving a desired level of sales and profits.
• E) Consistently producing sales above the breakeven level.

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Definitions:

Explicit Costs

Direct, out-of-pocket expenses incurred in conducting a business activity or making a decision.

Accounting Profits

The financial gains of a company calculated by subtracting total expenses from total revenues according to standard accounting practices.

Economic Profits

The financial difference between what a business earns in total revenue and what it spends, considering both explicit and indirect costs.

Implicit Costs

The opportunity costs involved in using resources that a firm already owns, for which it does not make a direct payment.