Answered: Break-even analysis is of limited use…

Break-even analysis is of limited use to management because a company cannot survive by just breaking even." Do you agree with this statement? Please give a detailed explanation.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter1: Accounting As A Tool For Managers

Section: Chapter Questions

Problem 23MC: Which of the following is not true regarding continuous improvement? It applies to both service and...

See similar textbooks

Related questions

Q: Management is considering a one-time-only special order. There is sufficient idle capacity to fill…

A: Introduction:- Management (or management) is the administration of a company, whether for-profit,…

Q: The barrier to entry that helps reduce the threat of new entrants for an incumbent firm using a…

A: Cost Leadership: in cost leadership a company has lower cost of operation. Cost leadership company…

Q: “A branch office or business segment that shows negative operating income should be shut down.” Do…

A: Operating Income:Operating income is income which is earned by carrying out the regular business…

Q: Break-even analysis is concerned with determining a point at which the company can minimize total…

A: Breakeven analysis is very important done by management and cost accountants of the business. With…

Q: T. Turnover due to low job satisfaction may be desirable if it facilitates the introduction of new…

Q: 1)What is cost behavior analysis? and Why is cost behavior analysis important to management?…

A: A break-even point is a point or number of units at which all the revenues generated by the company…

Q: Under what type of financial risks you would put these risk factors? Economic Distress…

A: A risk is something that can cause a possible loss or damage to an individual or a corporation and…

Q: Which of the following is NOT a principle of lean manufacturing? a. Products are pushed from the…

A: Lean manufacturing: It is method that is used with focus of minimizing the waste that are within a…

Q: A business that has a low operating leverage is considered normal for highly automated manufacturing…

A: Low operating leverage is preferable only for those organizations which has low fixed costs

Q: Break-even analysis is of limited use to management because a company cannot survive by just…

A: Breakeven analysis involves comparison of fixed cost, variable cost and sales price to derive the…

Q: Classify each of the following as a problem or a symptom. If it is a symptom, give two examples of a…

A: a.

Q: Discuss some of the limitations and problems that companies may encounter when implementing a JIT…

A: JIT system refers to Just-in-time which implies that it is a method of managing the inventory. It…

Q: 5. Which of the following statements concerning ideal standards is incorrect? a)Ideal standards…

A: Management accounting is one of the branch of accounting in which decisions are being made with the…

Q: Company X sees a disruption in its supply chain at the same time it sees a decrease in customer…

A: A supply chain network is an organization of individuals, associations, and exercises that move an…

Q: Prime indicators of problems with a conventional costing system include company profits being eroded…

A: Product cost refers to the cost or expense which is incurred for creating the product and this cost…

Q: what is meant by the term break-even point? why should a manager be concerned about the breakeven…

A: Financial statements are statements which states the business activities performed by the company .…

Q: If the margin of safety is 0, then The company is precisely breaking even The company is operating…

A: Margin of safety is sales above the break-even point. If margin of safety is 0, it indicates sales…

Q: Resilence in the case of a corporate means: O Increasing efficiency of production by re-structuring…

A: Corporate resilience is the ability and capacity to adapt or mobilize features that enable the…

Q: Which of the following statements is most correct? JUST EXPLAIN ONE ANSWER WHICH IS INCORRECT. a.…

A: Following is the answer to the given question

Q: The president of Bright Corporation tells you that he sees a dim future for his company. He feels…

A: If fixed costs are high, a company find it difficult to manage short term revenue fluctuation,…

Q: Why might relevant costs analysis be bad for a company if used too frequently? Multiple Choice…

A: Introduction: In managerial accounting, avoidable expenses that are only incurred in conjunction…

Q: 1.Why the limitation of portfilio analysis that have caused some companiesto reduce their approach…

A: Portfolio analysis is a method of evaluating an investment portfolio to meet the requirements of an…

Q: “If a product line is generating a loss, then it should be discontinued.” Do you agree? Explain.

Q: Which of the following is not true regarding continuous improvement?A. It applies to both service…

A: Continuous Improvement means business or process should be improving on regular or continuous basis.…

Q: Do you think it is realistic for a smaller company to reach and enjoy this beneficial negative CCC?

A: CCC CCC stands for cash conversion cycle. It refers to the time taken in days by a business to…

Q: The chairman of the board of directors of the company for which you are chief accountant has told…

A: Historical cost is usually the price at which the asset is recorded that was purchased at. As the…

Q: If a firm applies the same discount rate to all projects for all of its divisions, the firm will…

A: Discounted method techniques are applied under capital budgeting in financial management. In…

Q: Give an example of a leveraged company that might have a spectacular ROE because the owners have put…

A: A company's capital structure can be formed with shareholders' funds(equity) and outside…

Q: A business that has a low operating leverage is considered normal for highly automated manufacturing…

A: Business is defined as any activity that assists in earning an income for the owner or the person…

Q: Inflation accounting is favored by modern financial analysts over the historical cost accounting as…

A: Following are the disadvantages of historical cost accounting in comparison with inflation…

Q: Managers should pay little attention to bottleneck operations since they have limited capacity for…

A: In case of company manager play an important role in order to run the company and perform their…

Q: From an investor perspective ESOPs are the most valuable if used to help prevent takeovers but are…

A: ESOPs are issued by the corporations to the employees. It will provide ownership rights to the…

Q: what if in the future, it will earn a negative RCE. Is this possible for a company? Why?

A: RCE = return on capital employed. ------------------------ Return on capital employed is the ratio…

Q: In a strategy meeting, the computer manufacturing company's president said, "If we raised the price…

A: Break-even point is computed by dividing the total fixed cost by the contribution margin.…

Q: Identify the major problems in this situation and explain how they impact the organization. You will…

A: Soldering workers rarely accomplish operations in less time than the standard permits at the moment.…

Q: Consider how Break-Even analysis would change (i.e. how is the breakeven point affected) in the…

A: The question is related to Breakeven Point. The Breakeven Point is that level of sales at which…

Q: Which of the following statements about operating leverage is false? O a. Keeping all factors…

A: Operating leverage: It is a cost account accounting method or technique used by the firm to measure…

Q: What does a consistently negative responsibility marginimply will happen to the operating income of…

A: The revenue less occurred variable costs(VC) and also the traceable fixed costs(FC) could result in…

Q: Which of the following statements most likely describes a situation that would motivate amanager to…

A: When the financial statement of an entity includes data which can mislead the users or the data is…

Q: Do you agree or disagree with this statement? why?

A: Given statement is: Since break-even analysis focuses on making zero profit, it is of no value in…

Q: Suppose that Adriana’s decision was prompted mostly by the desire to receive the computer quickly.…

A: Internal Processes are those process and procedures which every company follows to improve…

Q: “Performance reports based on controllability are impossible. Nobody really controls anything in an…

A: Controllability principle is defined as the stipulation, which used to evaluate the manage on the…

Question

"Break-even analysis is of limited use to management because a company cannot survive by just breaking even." Do you agree with this statement? Please give a detailed explanation.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Break-even analysis is of limited use to management because a company cannot survive by just breaking even." Do you agree with this statement? Please explain. Discuss the components of the Contribution Margin Income Statement, how does management use this in the decision making process?
1)What is cost behavior analysis? and Why is cost behavior analysis important to management? 2)“Break-even analysis is of limited use to management because a company cannot survive by just breaking even.” Do you agree? Agree or not agree, please describe your line of reasoning.
Which of the following is a disadvantage of outsourcing? A. freeing up capacity B. freeing up capital C. transferring production and technology risks D. limiting ability to upsize or downsize production
1.Why the limitation of portfilio analysis that have caused some companiesto reduce their approach of this is that "It is not always clear what makes an industry attractive or where a product isin its life cycle"
Which of the following statements are false? SELECT ALL THAT APPLY a. One of the dangers of allocating common fixed costs to a product line is that such allocations can make the line appear less profitable than it really is. b. A new fixed cost that must be paid if a special offer is accepted is not relevant in making the decision. c. A cost that will be incurred regardless of which course of action a manager takes is relevant to the manager's decision. d. Your Company is considering replacing Machine X. The original cost of Machine X is not relevant to this decision.
Explain with an example why managers find it difficult to adopt a decision alternative even when the relevance cost analysis shows the superiority of this decision alternative to maximize operating income over other decision alternatives. What might the company do to reduce the pressure on management and decrease the ethical conflict?
“A branch office or business segment that shows negative operating income should be shut down.” Do you agree? Explain briefly.
Do you think it is realistic for a smaller company to reach and enjoy this beneficial negative CCC?
Which of the following statements is false with respect to replacement analysis? a. Functional obsolescence is the only type of obsolescence that should be considered in a replacement analysis. b. A changing external environment can lead to the need for a replacement analysis. c. Companies frequently use equipment long after a replacement would be economically justified. d. In a replacement analysis, the current asset is referred to as the defender.
Identify the major problems in this situation and explain how they impact the organization. You will need to consider both behavioral and analytical factors. Specifically, how might managerial accounting concepts, tools, or techniques be applied to help resolve this dilemma? What are possible consequences of applying the same to this dilemma? Briefly explain Orange Electronics has been experiencing declining profit margins and has been looking for ways to increase operating income. It cannot raise selling prices for fear of losing business to its competitors. It must either cut costs or improve productivity. The company uses a standard cost system to evaluate the performance of the soldering department. It investigates all unfavorable variances at the end of the month. The soldering department rarely completes the operations in less time than the standard allows (which would result in a favorable variance). In most months, the variance is zero or slightly unfavorable. Reasoning that…
5. Which of the following statements concerning ideal standards is incorrect? a)Ideal standards may be better than practical standards when managers seek continual improvement b)Ideal standards do not make allowances for waste, spoilage, and machine breakdowns c)Ideal standards generally do not provide the best motivation for workers. d)Ideal standards are better suited for cash budgeting than practical standards
(a) Explain how return on investment might lead a divisional manager to reject new investments that could be profitable for the company as a whole. (b) How can this disadvantage be overcome?