Question

18. Which of the following statements is wrong regarding the break-even analysis approach to investment appraisal? a. Break-even analysis is used to find out how far off the estimates could be before the project begins to lose money b. The marginal cost of sales will have to be incurred whether the goods are c. Order maybe accepted below the normal selling price when the order will d. manufactured or purchased, so we can ignore the marginal cost of sales. result in further contribution to cover fixed costs and add to profit. Marginal costing can help management to decide on pricing policy, the firm should accept the order which provides the highest selling price. 19. The following information relates to a product. Fixed costs Required profit Selling price per unit Variable cost per unit 72000 30000 10 How many units must be produced and sold to cover fixed costs and make the required profit? a. 12000 b. 17000 c. 18000 d. 25500 20. A company is classifying its costs. It discovers that for any level of output between 10000 and 15000 units the freight cost per unit is always the same figure of $2 per unit. Of which type of cost is this an example? a. Fixed cost. b. Semi-variable cost. c. Stepped fixed cost. d. Variable cost

Answer 1