Question

I8 Which of the following statements is vw approach to investment appraisal? ล. Break-even innalysis isused 1o find ont how far off the ostimates could be b. The marginal cost of sales will have to be incurred whether the goods are c Order mayb d. Marginal costing can help management to decide on pricing policy, the f before the project begins to lose money manufactured or purchased, so we can ignore the marginal cost of sales result in further contribution to cover fixed costs and add to profn should accept the order which provides the highest selling price be accepted below the normal selling price when the order will 19, The following information relates to a product. Fixed costs Required profit Selling price per unit 72000 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 第5页共10页

Answer 1

18. (d) Marginal Costing can help management to decide on pricing policy, the firm should accept the order which provides the highest selling price.

The given statement is wrong as the marginal costing helps management to decide whether to accept a project given a particular offer price. Management accepts a project when the offer price is greater than marginal cost to be incurred to manufacture the goods.

19) b) 17000

Units need to be sold to cover the fixed cost and make the required profit

= (Fixed Cost + Required Profit) / Contribution per Unit

= (72000+30000) / (10-4)

= 102000 / 6

= 17000

20) d) Variable Cost

Because the freight cost varies with the number of units of production. If output is 10000 units freight cost will be $20000, if output is 11000 units freight cost will be $22000 etc. Thus it is varying with the units of output.