A Firm with 60% of Sales Going to Variable Costs,$1

question 95

Multiple Choice

A firm with 60% of sales going to variable costs,$1.5 million fixed costs,and $500,000 depreciation and sales of $3 million.How does the current level of sales compare to the accounting break-even sales level?

• A) Current sales are $2 million below the break-even level.
• B) Current sales are $333,333 below the break-even level.
• C) Current sales are $800,000 below the break-even level.
• D) Current sales exceed the break-even level by $360,000.

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Definitions:

Diversified Portfolios

Investment strategies involving a mix of assets (stocks, bonds, real estate, etc.) to reduce risk through diversification.

Positive Correlation

A relationship between two variables where they move in the same direction; as one increases, the other also increases.

Recession Risk

The likelihood of an economic downturn, characterized by a significant decline in economic activity across the economy lasting more than a few months.

Partial Certainty

This refers to a scenario in business or decision-making where there is some known information, but complete certainty about outcomes is not possible, reflecting a mix of known and unknown variables.