Which of the following statements is CORRECT? Select one: a. The margin of safet
ID: 2546067 • Letter: W
Question
Which of the following statements is CORRECT? Select one: a. The margin of safety percentage multiplied by the percent change in sales equals the percent change in net income. b. If a publicly-traded company decides to report net income using variable costing instead of absorption costing, it must notify stockholders (and the SEC) within 30 days C. The fraction that results when net income is divided by contribution margin is one example of degree of financial leverage. d. It is possible for the breakeven point to also be the point of indifference. e. When a company notices that this year's net income will actually be a net loss, the company should immediately shut downExplanation / Answer
option d) Answer
It is possible for the breakeven point to also be the point of indifferecne.
Cost/volume analysis is used to find the point of indifference between two options based on fixed and variable costs. A breakeven point is computed in terms of units or dollars. Breakeven is simply a special case of cost/volume analysis where there is one fixed cost, one variable cost and a revenue per unit.
option d) Answer
It is possible for the breakeven point to also be the point of indifferecne.
Cost/volume analysis is used to find the point of indifference between two options based on fixed and variable costs. A breakeven point is computed in terms of units or dollars. Breakeven is simply a special case of cost/volume analysis where there is one fixed cost, one variable cost and a revenue per unit.
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