Using Cost-Volume-Profit Analysis, We Can Conclude That a 20 Per

question 53

Multiple Choice

Using cost-volume-profit analysis, we can conclude that a 20 per cent reduction in variable costs will

• A)reduce the break-even sales volume by 20 per cent.
• B)reduce total costs by 20 per cent.
• C)reduce the slope of the total cost line by 20 per cent.
• D)not affect the break-even sales volume if there is an offsetting 20 per cent increase in fixed costs.

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Definitions:

Manufacturing

The process of converting raw materials or components into finished goods through the use of labor, machinery, and processing techniques.

Production Control

Creates a well-defined set of procedures for coordinating people, materials, and machinery to provide maximum production efficiency.

Timetables

Schedules that specify the times at which certain events or activities are intended to occur, often used in transportation, education, and project planning.

Six Sigma

A set of management techniques intended to improve business processes by vastly reducing the probability that an error or defect will occur.