Which of the Following Statements About Using the Equation Method

question 51

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:

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