A Technique That Analyzes the Relationship Between Total Revenue and Total

question 132

Multiple Choice

A technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output is referred to as

• A) break-even analysis.
• B) marginal analysis.
• C) sensitivity analysis.
• D) market analysis.
• E) tipping point analysis.

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Definitions:

Direct Labor-Hours

A measure of the total hours worked by employees who are directly involved in the manufacturing or production process.

Fixed Manufacturing Overhead

The portion of manufacturing overhead costs that remain constant regardless of the level of production, such as rent and salaries of permanent staff.

Denominator Activity

In managerial accounting, a measure of activity used to allocate fixed costs to cost objects.

Cost Per Unit

It represents the total cost incurred for producing, manufacturing, or acquiring a product divided by the number of units.