Final answer:
Cash break-even analysis does not eliminate depreciation expense and other non-cash charges from fixed costs. Option B is correct.
Step-by-step explanation:
Cash break-even analysis does not eliminate depreciation expense and other non-cash charges from fixed costs. It focuses on determining the level of sales or units that a company needs to cover all its costs (both fixed and variable) and reach the break-even point. In this analysis, fixed costs include expenditures like rent, equipment, and research and development costs. However, since depreciation is a non-cash charge, it is not considered a cash outflow and is therefore eliminated from the cash break-even analysis. So, it is true that cash break-even analysis eliminates the depreciation expense and other non-cash charges from fixed costs.
Fixed costs include expenses that do not change regardless of the level of production, such as rent, machinery costs, and research and development expenses. On the other hand, depreciation expense represents the allocation of the cost of an asset over its useful life, and it is considered a non-cash charge. Therefore, the statement that cash break-even analysis eliminates the depreciation expense and other non-cash charges from fixed costs is False.