Which of the Following Statements Are Correct Concerning the Accounting

question 43

Multiple Choice

Which of the following statements are correct concerning the accounting break-even point?
I. The net income is equal to zero at the accounting break-even point.
II. The net present value is equal to zero at the accounting break-even point.
III. The quantity sold at the accounting break-even point is equal to the total fixed costs plus depreciation divided by the contribution margin.
IV. The quantity sold at the accounting break-even point is equal to the total fixed costs divided by the contribution margin.

• A) I and III only
• B) I and IV only
• C) II and III only
• D) II and IV only
• E) I, II, and IV only

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Definitions:

Direct Labor

The wages and salaries for the workers who are directly involved in the production of goods, easily traceable to the product.

Credit Sales

Sales made by a business where the payment is deferred, allowing the buyer to pay at a later date.

Production Budget

An estimation of the number of units that must be manufactured to meet the sales goals and the estimated costs involved.

Ending Inventory

The total value of all inventory, including raw materials, work-in-progress, and finished goods, at the end of an accounting period.