Cost behaviour and break-even analysis
- Created by: josief95
- Created on: 13-12-15 13:37
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
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