By What Amount Can Sales Decline Before Losses Are Incurred

question 42

Multiple Choice

By what amount can sales decline before losses are incurred?

• A) by the fixed costs
• B) by the margin of safety
• C) by the contribution margin
• D) by the degree of operating leverage

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Definitions:

Financial Condition

An assessment of an entity's ability to meet its financial commitments, based on its assets, liabilities, and equity positions at a given time.

Corporation

A legal entity that is separate and distinct from its owners, which can own assets, incur liabilities, and be sued or sue.

Advantages

Advantages are benefits or favorable factors that contribute to the success and competitiveness of a business or strategy.

Disadvantages

The negative or less favorable aspects of a situation, decision, or item.