Question

Which one of the following is known as a technique of controlling?

• A. Margin of safety
• B. Margin of Contribution
• C. Break-even analysis
• D. P/V Ratio

Answer 1

The correct option is C Break-even analysis

Break-even analysis is a modern technique used by managers to study the relationship between costs, volume and profits. It determines the probable profit and losses at different levels of activity.

It is a useful technique for the managers as it helps in estimating profits at different levels of activities.