You are asked by a non-marketing executive of your hip-hop music company to clarify some financial language she heard at a recent annual presentation to investors. She asks you to give her a simple one-sentence definition of "breakeven analysis."
Required:
Which of the following definitions meets her request for a simple one-sentence definition of "breakeven analysis?"
A) "We have been cutting records for years, so our customers are used to paying a certain amount for our albums. We keep our price constant to get repeat business."
B) "We first do our research to find out what price our competitors are selling their records for. Then we use that number to figure out how many records we need to cut to make a larger profit than our competitors."
C) "We first figure out the number of records we need to sell at a set price minus records returned for refunds. That amount of money must be enough to cover the total costs of our producing the records."
D) "We use all our information from the previous year's sales, then we add 10 percent to the production and 10 percent to the price."
E) "We want to make sure that we sell all the albums that we produce, so we start out at a full price, and make discount adjustments along the way."

Question

You are asked by a non-marketing executive of your hip-hop music company to clarify some financial language she heard at a recent annual presentation to investors. She asks you to give her a simple one-sentence definition of "breakeven analysis." ​
Required:
Which of the following definitions meets her request for a simple one-sentence definition of "breakeven analysis?"
A) "We have been cutting records for years, so our customers are used to paying a certain amount for our albums. We keep our price constant to get repeat business."
B) "We first do our research to find out what price our competitors are selling their records for. Then we use that number to figure out how many records we need to cut to make a larger profit than our competitors."
C) "We first figure out the number of records we need to sell at a set price minus records returned for refunds. That amount of money must be enough to cover the total costs of our producing the records."
D) "We use all our information from the previous year's sales, then we add 10 percent to the production and 10 percent to the price."
E) "We want to make sure that we sell all the albums that we produce, so we start out at a full price, and make discount adjustments along the way."

Quizplus · Accepted Answer

Breakeven analysis determines the sales volume needed at a given price to cover total costs, without considering returns or profit, which matches choice C's description.

You Are Asked by a Non-Marketing Executive of Your Hip-Hop