The relationship between sales volume and operating profitability is explored in _____.
A) cost-volume-profit planning
B) financial breakeven analysis
C) the projected balance sheet method
D) the degree of financial leverage
E) economies of scale

Question

Quizplus · Accepted Answer

Cost-volume-profit planning explores the relationship between sales volume and operating profitability by analyzing the effects of changes in volume, price, and costs on a company's profits. It helps in determining the breakeven point and the level of sales required to achieve a desired profit. Therefore, option A is the best choice. Financial breakeven analysis and the degree of financial leverage are also related to sales volume and profitability, but they focus more on the impact of financial structure and fixed costs on profits. The projected balance sheet method and economies of scale are not directly related to the relationship between sales volume and operating profitability.

The Relationship Between Sales Volume and Operating Profitability Is Explored