The break-even model enables the manager of the firm to
A) calculate the minimum price of common stock for certain situations.
B) set appropriate equilibrium thresholds.
C) determine the quantity of output that must be sold to cover all operating costs.
D) determine the optimal amount of debt financing to use.

Question

Quizplus · Accepted Answer

The break-even model is designed to determine the quantity of output that must be sold to cover all operating costs. This enables the manager of the firm to make decisions about pricing and production levels based on the amount of revenue required to cover costs and generate a profit. The other options, calculating minimum stock price, setting equilibrium thresholds, and determining optimal debt financing, are not directly related to the break-even model.

The Break-Even Model Enables the Manager of the Firm to