Cost behaviour and break-even analysis

?
  • Created by: josief95
  • Created on: 13-12-15 13:37

1. Margin of Safety:

  • It is the excess of planned volume (equity) of activity compared to the depreciation of (Capital) at Break-even Point
  • It is the excess of planned volume (sales revenue) of activity over volume (sale revenue) at Break-even Point
  • It is the excess of planned volume (equity) of activity over volume (Capital) at Break-even Point
1 of 19

Other questions in this quiz

2. Weaknesses of break-even analysis:

  • Non-linear relationships, Stepped fixed costs, Multi-product businesses
  • Linear relationships, curved fixed costs, Multi-product businesses
  • Linear relationships, flat rate fixed costs, Multi-product businesses

3. Irrelevant cost examples:

  • Sunk / Expired / Historic cost; a cost that doesn't require the decision of management
  • Sunk / Expired / Historic cost; a cost that will not impact the company
  • Sunk / Expired / Historic cost; a cost that will be avoided by the company

4. Break-even point (BEP):

  • Variable Cost / Contribution per unit (Contribution per unit = Variable costs per unit + Sales revenue per unit)
  • Fixed cost / Contribution per unit (Contribution per unit = Sales revenue per unit − Variable costs per unit)
  • Fixed cost / Contribution per unit (Contribution per unit = Variable costs per unit + Sales revenue per unit)

5. Fixed cost

  • It is a mixture of fixed and variable cost
  • Remain constant (fixed) when changes occur to the volume of activity
  • Vary according to the volume of activity

Comments

No comments have yet been made

Similar Accounting resources:

See all Accounting resources »See all Cost behaviour and break-even analysis resources »