A Major Assumption of Breakeven Analysis and One Which Causes

question 173

Multiple Choice

A major assumption of breakeven analysis and one which causes severe limitations in its use is that ________.

• A) fixed costs really are fixed
• B) total revenue is nonlinear
• C) revenues and operating costs are linear
• D) all costs are really semi-variable

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Definitions:

Cash Uses

Refers to how cash is spent or utilized by an individual or organization, including operating expenses, investment activities, and financing activities.

Direct Method

A way of preparing the cash flow statement in which actual cash flow information from the company's operations segment is used, rather than being derived from the income statement.

Operating Activities

Activities that constitute the primary or main activities of an organization, such as selling products or services.

Data Accumulation

The process of collecting, organizing, and storing data for analysis and decision-making purposes.