Which of the following statements MOST accurately describes breakeven analysis?
A) The breakeven analysis model assumes per-unit costs vary at different levels of operation.
B) The breakeven analysis model assumes that costs can be divided into fixed and variable costs.
C) The breakeven analysis attempts to use only costs directly associated with specific outputs in price setting.
D) The breakeven analysis can be used to determine the sales level needed to cover costs but not to achieve specific profit levels.

Question

Quizplus · Accepted Answer

Breakeven analysis assumes that costs can be divided into fixed and variable costs, and it is used to determine the sales level needed to cover costs as well as to achieve specific profit levels. Option A is incorrect because breakeven analysis assumes per-unit costs remain constant at different levels of operation. Option C is incorrect because breakeven analysis considers both direct and indirect costs in determining the breakeven point. Option D is also incorrect because breakeven analysis can be used to determine the sales level needed to achieve specific profit levels.

Which of the Following Statements MOST Accurately Describes Breakeven Analysis