Break-even analysis assumes linear revenue and cost functions. In reality, these functions may not always be linear

Question:

Break-even analysis assumes linear revenue and cost functions. In reality, these functions may not always be linear over large output and sales levels. Why?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Foundations Of Finance

ISBN: 9780135160619

10th Edition

Authors: Arthur J. Keown, John H. Martin, J. William Petty

See More Books

Question Posted: Sep 10, 2020 02:55 AM

See More Questions

A break- even analysis assumes linear revenue and cost functions. In reality, these linear functions deviate over large output and sales levels. Why?
Llano Lamps has the following revenue and cost functions: Revenue = $ 70 per unit Cost = $ 90,000 + $ 40 per unit a. What is the break-even point in units? b. What is the break-even point in dollars?
Monets Prints has the following revenue and cost functions: Revenue = $60 per unit Cost = $120,000 + $30 per unit a. What is the break-even point in units? b. What is the break-even point in dollars?
7. Arrange the following nitrogen containing compounds in decreasing order of basicity NH NH -H (P) (a) S>R>Q> P NO (R) (2) (b) P>Q>S>R -H (S) (c) P>Q>R>S (d) R>Q> P > S
A light bulb blows out at a rate of = 0.001/h. What is the probability that it blows out in less than 500 h? In less than 1 h? Compare your last answer with the definition of rate. Find the...
What strategies and frameworks can leaders employ to effectively delegate tasks and responsibilities, taking into account factors such as team member competencies, workload distribution, and risk...
Class Year in Statistics The StudentSurvey data file contains information from a survey done the first day of an introductory statistics course. The Year variable shows the class year (FirstYear,...
Homemade Leverage and WACC ABC Co, and XYZ Co, are identical firms in all respects except for their capital structure. ABC is all equity financed with $800,000 in stock. XYZ uses both stock and...
Walton Company measured its quality costs for the past two years and summarized those costs using the four categories shown below: Last Year Appraisal costs Prevention costs Internal failure costs $...
Suppose that peoples expectations of inflation are subject to random shocks. That is, instead of being merely adaptive, expected inflation in period t, as seen in period t 1, is Et1 t = t1 + t1,...
Distinguish between business risk and financial risk. How do these sources of risk contribute to the overall risk of a firm?
What is the primary weakness of using EBIT-EPS analysis as a tool for evaluating the merits of borrowing versus issuing more stock?
The tires of a car make 65 revolutions as the car reduces its speed uniformly from 95km/h to 45 km/h. The tires have diameter of 0.80m. (a) What was the angular acceleration of the tires? (b) If the...
DirectJet is a small regional airline based in northern Europe. It operates a small number of jet aircraft and could initially produce only 400,000 ASMs per day. However, the output rate picked up as...
Donna Corporation manufactures custom cabinets for kitchens. It uses a normalcosting system with two direct-cost categoriesdirect materials and direct manufacturing laborand one indirect-cost pool,...
Answer question 45 again, assuming that the sample is taken from a population of four numbers, 1, 2, 3, and 4. Question 45 Consider a population of six numbers, 1, 2, 3, 4, 5, and 6. What is the mean...
Plot, as a function of time, the rotational velocity of your car's wheels as you (a) back out of your driveway, (b) drive down a residential street, (c) turn onto a highway, (d) drive on the highway...
A pith ball is suspended from a string, and when a rubber rod is brought close to the ball at $t=0$, the ball is not noticeably affected by the rod. At $t=5.00 \mathrm{~s}$ the rod is turned...
One Spas was founded by Bob Hallam in 1977 and has grown to become one of the world's leading manufacturers of hot tubs and aquatic fitness systems. The company was first established as a chain of...
Select a mass spectrometric technique with the highest mass resolution for identifying an unknown compound being eluted from a liquid chromatography column
If yields on Treasury securities were currently as follows: a. Plot the yield curve. b. Explain this yield curve using the unbiased expectations theory and the liquidity preference theory. TERM YIELD...
At present, the real risk- free rate of interest is 2%, while inflation is expected to be 2% for the next 2 years. If a 2- year Treasury note yields 4.5%, what is the maturity- risk premium for this...
Youre considering an investment that you expect will produce an 8 percent return next year, and you expect that your real rate of return on this investment will be 6 percent. What do you expect...
A portfolio has a standard deviation of 25%. The correlation of the portfolio and the market is 1. If the risk-free rate is 3.2%, the expected return on the market portfolio is 11%, and the standard...
(6 pts.) The following gas phase reaction system is conducted in an isothermal constant volume batch reactor. The reactor is charged with pure A with an initial concentration CAO AB ri = k CA B D r2...
Based on the NPV and IRR investment criteria, should your company introduce a new candy flavor? 1) Should the cost of a marketing survey be included in your decision? Why or why not? 2) Calculate the...

Break-even analysis assumes linear revenue and cost functions. In reality, these functions may not always be linear

Question:

Step by Step Answer:

As the sales of a firm increase two things occur tha...View the full answer

Foundations Of Finance

Students also viewed these Business questions