Cost behaviour and break-even analysis

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

1. Opportunity cost

  • Value of an opportunity that has passed or been missed
  • Weighing up the value of each opportunity before decision is made
  • Value of an opportunity a business will take
1 of 19

Other questions in this quiz

2. Contribution margin ratio =

  • contribution / cost revenue x 100%
  • contribution / sales revenue x 100%
  • contribution / fixed cost per unit x 100%
  • contribution / cost of sales x 100%

3. Semi-Variable Cost or Semi-Fixed Cost

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

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

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

5. Weaknesses of break-even analysis:

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

Comments

No comments have yet been made

Similar Accounting resources:

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