If the Price Per Unit Decreases Because of Competition but the Cost

question 16

Multiple Choice

If the price per unit decreases because of competition but the cost structure remains the same

• A)the break-even point rises.
• B)the degree of combined leverage declines.
• C)the degree of financial leverage declines.
• D)All of the options

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Definitions:

Machine-Hours

A measure of production time wherein the focus is on the number of hours a machine is operated in the manufacturing of goods.

Casting Department

The casting department is a specialized segment within a manufacturing facility where metal casting processes are carried out to create metal parts.

Finishing Department

A section of a manufacturing company where goods are completed and prepared for sale.

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products, calculated before the period begins.