Master Break-Even Analysis
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Master Break-Even Analysis

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@AuthoritativeSagacity

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Questions and Answers

What is the assumption made by break-even analysis when evaluating products or services?

  • The cost function is linear and consists of only variable costs
  • The cost function is linear and consists of only fixed costs
  • The cost function is non-linear and consists of fixed costs plus variable costs times volume
  • The cost function is linear and consists of fixed costs plus variable costs times volume (correct)

    • How does the break-even quantity change when the change in variable cost per unit is identical to the change in unit price?

  • It decreases
  • It increases
  • It remains unchanged (correct)
  • It becomes negative

    • What happens to the break-even quantity when the fixed costs are increased?

  • It decreases (correct)
  • It remains unchanged
  • It increases
  • It becomes negative

    • What is the assumption made by break-even analysis when evaluating products or services?

    <p>The cost function is linear and consists of fixed costs plus variable costs times volume.</p> Signup and view all the answers

    What happens to the break-even quantity when the change in variable cost per unit is identical to the change in unit price?

    <p>It remains the same.</p> Signup and view all the answers

    What effect does increasing the fixed costs have on the break-even quantity?

    <p>It increases.</p> Signup and view all the answers

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