Which of the Following Statements Is True of the Economic

question 11

Multiple Choice

Which of the following statements is true of the economic break-even point?

• A) It is the number of units that must be sold for accounting operating profit to equal $0.
• B) It is the level of unit sales at which cash flows or profitability for one project alternative switches from being lower than that of another alternative to being higher.
• C) It is the number of units that must be sold each year during the life of a project so that the NPV of a project equals $0.
• D) It is the number of units that must be sold for pretax operating cash flow to be $0.

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Definitions:

Commission

A fee paid to an agent in a transaction, typically calculated as a percentage of the sale price.

Car Salesman

A person who sells new or used vehicles at a dealership.

Margins

The difference between the selling price of a good or service and its cost of production, often expressed as a percentage of the selling price, indicative of profitability.

Company Owned Store

A retail establishment directly controlled and operated by the corporation that owns the brand, as opposed to a franchise.