COST ACCOUNTING
BREAK EVEN POINT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
One of the assumptions of break-even analysis is that the scale of production remains unchanged.
|
|
True
|
|
|
False
|
Explanation:
Detailed explanation-1: -The break-even analysis uses three assumptions to determine a break-even point: fixed costs, variable costs, and unit price. Fixed costs and variable costs are both included in this glossary, and unit price is the average revenue per unit of sales.
Detailed explanation-2: -Total profit at the break-even point is zero.
Detailed explanation-3: -Answer and Explanation: A) the point where total profit equals total fixed expenses. This is incorrect because, at the break-even point, the total contribution margin and the total fixed costs are equal.
Detailed explanation-4: -Answer» B. Fixed cost remains certain from zero production to full capacity.
There is 1 question to complete.