Cost behaviour and break-even analysis

HideShow resource information

1. Margin of Safety in percentage

  • Planned Sales (units) – Break-even Point (units) x 100 / Planned Sales (units)
  • Planned Sales (units) / Break-even Point (units) x100
  • Planned Sales (units) + Break-even Point (units) / Unplanned debt x100 - 5
  • Planned Sales (units) + Break-even Point (units) x 100 / Planned Sales (units)
1 of 19

Other questions in this quiz

2. Margin of Safety:

  • 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
  • It is the excess of planned volume (equity) of activity compared to the depreciation of (Capital) at Break-even Point

3. Minimum price a business should charge for a lorry (£10,000) fitted with new engine (£2500) which could be sold immediately for (£9,000)

  • Historic cost (£10'000) + Engine cost (£2500) - Opportunity cost
  • Opportunity cost + Engine cost
  • Historic cost (£10'000) + Engine cost (£2500)

4. Historic cost

  • Cost that has been impacted by inflation
  • Cost already incurred
  • Cost that has gone up since original price

5. Irrelevant cost examples:

  • Sunk / Expired / Historic cost; a cost that will be avoided by the company
  • 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

Comments

No comments have yet been made

Similar Accounting resources:

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