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If calculations show that the break-even point is too high for the period, which of these is not a possible course of action? A. Consider changing the sales mix. B. Confirm that the cost forecasts used are reliable. C. Consider reducing prices. D. Consider the impact of increasing advertising costs to generate more sales.

Question

If calculations show that the break-even point is too high for the period, which of these is not a possible course of action? A. Consider changing the sales mix. B. Confirm that the cost forecasts used are reliable. C. Consider reducing prices. D. Consider the impact of increasing advertising costs to generate more sales.

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Solution

To determine which option is not a possible course of action if the break-even point is too high, let's analyze each option step by step:

A. Consider changing the sales mix.

  • Changing the sales mix can potentially increase the overall contribution margin, thereby lowering the break-even point. This is a viable course of action.

B. Confirm that the cost forecasts used are reliable.

  • Ensuring that cost forecasts are accurate is essential for reliable break-even analysis. This is a necessary step to validate the calculations.

C. Consider reducing prices.

  • Reducing prices would lower the contribution margin per unit, which would actually increase the break-even point rather than decrease it. This is not a viable course of action.

D. Consider the impact of increasing advertising costs to generate more sales.

  • Increasing advertising costs could lead to higher sales volumes, which might help in achieving the break-even point more quickly. This is a possible course of action.

Based on the analysis, the option that is not a possible course of action is:

C. Consider reducing prices.

This problem has been solved

Similar Questions

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