Podcast
Questions and Answers
What is the assumption made by break-even analysis when evaluating products or services?
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?
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?
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?
What is the assumption made by break-even analysis when evaluating products or services?
What happens to the break-even quantity when the change in variable cost per unit is identical to the change in unit price?
What happens to the break-even quantity when the change in variable cost per unit is identical to the change in unit price?
What effect does increasing the fixed costs have on the break-even quantity?
What effect does increasing the fixed costs have on the break-even quantity?
Flashcards
Break-even Analysis Assumption
Break-even Analysis Assumption
The total cost function is a straight line, with fixed costs as the intercept and variable costs per unit as the slope.
Break-Even Point
Break-Even Point
The break-even point is the point where total revenue equals total costs. In other words, it's the quantity of goods or services that must be sold to cover all fixed and variable costs.
Break-even Quantity with Equal Changes
Break-even Quantity with Equal Changes
If the change in variable cost per unit matches the change in the unit price, the break-even point remains the same.
Fixed Costs and Break-even Quantity
Fixed Costs and Break-even Quantity
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Break-Even Quantity Definition
Break-Even Quantity Definition
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Break-even Analysis
Break-even Analysis
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