Asked by jessica portnoy on May 02, 2024
Verified
The basic break-even model can be modified to handle more than one product. This extension of the basic model requires
A) price and sales volume for each product.
B) price and variable cost for each product, and the percent of sales that each product represents.
C) that the firm have very low fixed costs.
D) that the ratio of variable cost to price be the same for all products.
E) sales volume for each product.
Break-Even Model
A financial calculation to determine the point at which revenue equals expenses, resulting in neither profit nor loss.
Variable Cost
Expenses that change in proportion to the activity of a business.
Fixed Costs
Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.
- Comprehend and compute the break-even points for either a single product or multiple products.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
B
Explanation :
To handle more than one product, the break-even model needs to consider the price and variable cost for each product, as well as the percentage of sales that each product represents. This information is necessary to accurately determine the break-even point for each product and make informed decisions about production and pricing strategies. The other choices listed do not provide sufficient information to handle multiple products in the break-even model.
Learning Objectives
- Comprehend and compute the break-even points for either a single product or multiple products.