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:

Optimal Level

Refers to the most favorable point, degree, or amount of something for a particular purpose or outcome.

Arousal Theory

A theory in psychology that suggests motivation is partly driven by a person's need to maintain an optimal level of arousal.

Tension

A psychological or emotional strain that results from demanding circumstances, often leading to feelings of anxiety or stress.

Ultimate

Representing the final or most significant version of something, or the fundamental principles underlying a concept.