Assume a Company Sells a Single Product

question 175

Multiple Choice

Assume a company sells a single product. If Q equals the level of output, P is the selling price per unit, V is the variable expense per unit, and F is the fixed expense, then the break-even point in sales dollars is:

• A)F/(P-V).
• B)F/[Q(P-V)].
• C)F/[Q(P-V)/P].
• D)F/[(P-V)/P].

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Definitions:

Straight-Line Depreciation

A system for distributing a tangible asset's cost over its functional life in uniform yearly figures.

Income Tax Expense

The expense recorded to account for taxes on profits earned by an organization, which is charged against its income.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the goal of investor’s wealth maximization.

Straight-Line Depreciation

A technique that distributes the expense of a physical asset across its life expectancy in identical yearly sums.