Regarding break-even analysis, a good marketing manager knows that
A. assuming a straight-line total revenue curve incorrectly suggests that any quantity can be sold at the assumed price.
B. break-even analysis is useless for comparing pricing alternatives.
C. a break-even chart is a complicated visual aid for computing the break-even point.
D. the usual straight-line total cost curve applies only when economies of scale exist.
E. a high fixed-cost contribution per unit will lead to high profits.
Answer: A
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Answer the following statement true (T) or false (F)
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1. Vacation pay is an example a liability that exists but the exact amount is not known. 2. Because a company usually does not know the amount of the year-end bonus at year-end, no liability is recorded. 3. Alpine Enterprises estimates that it will pay a 5% bonus on annual net income after deducting the bonus. The company reports net income of $500,000 before the calculation of the bonus. Employee Bonus Expense will be debited for $25,000. 4. Since a company usually does not know the amount of the year-end bonus at year-end, the company estimates the amount of the bonus based on a percentage. 5. Jamison Enterprises estimates that it will pay a 5% bonus on annual net income after deducting the bonus. If Jamison reports net income of $480,000 before the calculation of the bonus, the amount of the bonus is $24,000.