Which of the Following Statements About Using the Equation Method

question 11

Multiple Choice

Which of the following statements about using the equation method to determine the break-even point is true?

• A) Operating income in the equation is set equal to the target income for the year.
• B) Operating income in the equation assumes that fixed costs are nil.
• C) Revenue in the equation includes only operating revenues plus fixed costs.
• D) The number of units required to reach the break-even point tends to be higher (as it incorporates total costs) using this method than when using the Contribution Margin method.
• E) Operating income in the equation is set equal to nil.

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Definitions:

Two Position

A term referring to devices or controls that have two distinct settings or positions, such as on/off switches or binary valves.

Measured Medium

The specific substance or entity whose properties or characteristics are being quantified or monitored.

Dead Zone

A region in a control system's response where small input changes produce no output change, leading to inaccuracy or unresponsiveness.

Pilot Control Device

A manual or automatic apparatus used to start, stop, or regulate the operation of machines via control circuits.