When sales dollars are used as the measure of volume in the cost-volume-profit equation,the focus is on solving for which of the following?
A)total revenue required to break even rather than total units.
B)a target profit rather than total units.
C)total revenue required to break even rather than total units and a target profit rather than total units.
D)One cannot utilize cost-volume-profit relationships to solve for sales dollars.

Question

Quizplus · Accepted Answer

When sales dollars are used as the measure of volume in the cost-volume-profit equation, the focus is on solving for both the total revenue required to break even and a target profit, rather than just total units. This is because sales dollars take into account both the number of units sold and the price at which they are sold, making it a more accurate measure of volume for businesses with varying prices or product lines. Therefore, the correct answer is C. Option A is incorrect because it only solves for total revenue required to break even, while option B only solves for target profit. Option D is incorrect because cost-volume-profit relationships can be utilized to solve for sales dollars.

When Sales Dollars Are Used as the Measure of Volume