The Difference Between an NPV Break-Even Level of Sales and an Accounting

question 15

Multiple Choice

The difference between an NPV break-even level of sales and an accounting break-even level of sales is:

• A) the consideration of opportunity cost.
• B) the consideration of depreciation expense.
• C) the allowance of the sales level to vary in response to changes in demand.
• D) the inclusion of income taxes.

---

Definitions:

Joint Costs

Costs incurred in the process of producing two or more products simultaneously up to a split-off point, where they become distinguishable.

Market Value at Split-Off Method

A method used in accounting to allocate joint costs to products based on their market values at the point where the products are separable or "split off" from the joint process.

Joint Costs

Costs incurred in the process of producing two or more joint products before the point at which the products become separately identifiable.

Joint Costs Method

An accounting approach used to allocate costs among multiple products that are produced simultaneously from the same process or materials.