If Calculations Show That the Break-Even Point Is Too High

question 52

Multiple Choice

If calculations show that the break-even point is too high for the period which of these is not a possible course of action?

• A)consider reducing prices
• B)consider changing the cost mix between fixed and variable costs
• C)consider changing the sales mix
• D)recheck the assumptions on which the analysis is based

---

Definitions:

Manufacturing Overhead

Costs related to the production process that are not directly tied to the product, such as rent for the manufacturing space, utility costs, and salaries for manufacturing management.

Traditional Costing System

A costing method that assigns manufacturing overhead costs to products based on volume metrics such as machine hours or labour hours.

Direct Labor-Hours

The entirety of hours committed by personnel directly involved in the process of production.

Activity-Based Costing

An accounting method that assigns costs to products and services based on the activities and resources that go into producing them, providing more accurate product costing.