Which of the Following Is Not Correct About CVP Analysis

question 82

Multiple Choice

Which of the following is not correct about CVP analysis?

• A)Managers estimate the predicted profitability of choices.
• B)Useful to managers because they calculate units that need to be sold to breakeven.
• C)Managers make strategic decisions about selling prices and operating income.
• D)Managers make decisions about choosing additional features of an existing product.
• E)Managers are unable to make strategic decisions about selling prices and operating income.

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Definitions:

Marginal Rate

The rate of increase in a variable (e.g., tax rate, substitution, technical substitution) as another variable (e.g., income, quantity of another good) increases incrementally.

Increase

An upward movement in quantity, value, or some other measure, indicating growth or accumulation.

Income Taxed

A government levy on individual or corporate income.

Regressive Tax Structure

A tax system where the tax rate decreases as the taxable amount increases, placing a higher burden on low-income earners compared to high-income earners.