Which of the Following Observations Is True

question 196

Multiple Choice

Which of the following observations is true?

• A) The break-even point can also be figured in dollars.
• B) For a single price, multiple break-even points are possible.
• C) Beyond the break-even point, profits will grow continually.
• D) At break-even point, a firm will cover only its variable costs.
• E) At break-even point, a firm will cover only its fixed costs.

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Definitions:

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred during production and the standard cost of variable overhead allocated for the actual production volume.

Fixed Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs, attributed to the variance in the volume of production.

Fixed Component

A cost or part of a cost that remains unchanged regardless of changes in the level of output or activity.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual products or job orders based on a specific activity measure, like labor hours or machine hours.