Once Sales Reach the Break-Even Point,each Additional Unit Sold Will

question 40

Multiple Choice

Once sales reach the break-even point,each additional unit sold will:

• A) increase fixed cost by a proportionate amount.
• B) reduce the margin of safety.
• C) increase the company's operating leverage.
• D) increase profit by an amount equal to the per unit contribution margin.

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Definitions:

Covariance Risk

The degree to which two assets' returns move in relation to each other, indicating the risk inherent in holding the assets together in a portfolio.

Systematic Risk

The risk inherent to the entire market or market segment, often referred to as market risk, which cannot be eliminated through diversification.

Coefficient of Variation Risk

A statistical measure used to assess the risk of an investment by calculating the ratio of the standard deviation to the mean return, indicating variability in relation to the expected return.

Unsystematic Risk

Also known as specific risk, it refers to the risk associated with individual assets, distinct from the market's overall movements.