Break-Even Analysis Is Useful Because It Allows Managers to

question 21

Multiple Choice

Break-even analysis is useful because it allows managers to

• A)quantify the relationship between price elasticity and product elasticity.
• B)reposition products based on their break-even positioning revenue.
• C)estimate the quantity they will need to sell at a given price to break even.
• D)determine the relationship between price and quantity demanded.
• E)analyze the different elements contributing to their variable costs.

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Definitions:

Accounting Break-even

The point at which a company's total revenues equal its total expenses, and it begins to make a profit.

Financial Break-even

The point at which total revenues exactly cover total costs, resulting in no profit or loss.

Net Present Value

A financial metric that calculates the present value of all future cash flows (positive and negative) expected from an investment, discounted back to the present.

Single Variable

A single variable refers to an isolated factor in an experiment or equation, allowing for analysis or manipulation to understand its effects.