Break-Even Analysis Is Used in Situations When

question 11

Multiple Choice

Break-even analysis is used in situations when:

• A)the decision-maker is a non-profit organisation.
• B)the decision-maker is concerned with questions such as 'What will be the net present value if sales are 20% lower than expected?'
• C)the project under consideration is an item that does not generate positive cash flows.
• D)the decision-maker is concerned with questions such as 'How low can sales go before the project starts losing money?'

Recognize the necessity of covering all costs and generating profits for long-term business sustainability.

Understand the significance of EBITDA in internal decision-making processes.

Realize the importance of choosing products with higher contribution margins for profitability in the short run.

Understand the differences between absorption costing and variable costing.

---

Definitions:

Carrying Capacity

The maximum population size of a species that an environment can sustain indefinitely, given the food, habitat, water, and other necessities available in the environment.

Demographic Transition

A model describing how the birth and death rates of a population change over time as a country develops from pre-industrial to industrial economic system.

Environmental Resistance

Factors in the environment that limit the growth, abundance, or distribution of an organism or a population of organisms.

Replacement Reproduction

Population in which each person is replaced by only one child.