BREAKEVEN ANALYSIS

Which of the following INCREASES the BEP or Breakeven Point

• decrease the Fixed Cost

• decrease the SPU or selling price per unit

• increase the Fixed Cost

• decrease VCU or variable cost per unit

Which of the following item(s) is(are) FIXED COST

• raw materials, labor/wage, variable overhead

• interest expense, rent expense, salary

• raw materials, utilities i.e electricity, water, telecom

For Product XY, consider the following data:

Total Sales Revenue: 25,000 OMR

Total sales quantity: 550 units

Variable cost: 13,500 OMR

Fixed cost: 6,500 OMR

What is the BEP?

• 210 units

• 310 units

• 410 units

• 110 units

What is TRUE about Margin of Safety MOS?

• MOS should be small as possible

• MOS should be as large as possible

• MOS is not an important parameter in Breakeven Analysis

Which is(are) TRUE about Contribution Margin CM?

• A.

  Is a profitability index after covering Fixed cost

• B.

  CM must be equal to Fixed Cost for a product to be profitable

• C.

  CM must be greater than Fixed Cost for a product to be profitable

• Both A and B

• Both A and C