COST ACCOUNTING
BREAK EVEN POINT
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Average cost
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Margin of safety
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Purchasing economy of scale
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Contribution per unit
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Detailed explanation-1: -The downward sloping portion of the curve is an economy of scale, the average cost rises proportionately less to output.
Detailed explanation-2: -Economies of scale are cost advantages that can occur when a company increases their scale of production and becomes more efficient, resulting in a decreased cost-per-unit. This is because the cost of production (including fixed and variable costs) is spread over more units of production.
Detailed explanation-3: -Economies of scale are the advantages that can sometimes occur as a result of increasing the size of a business. For example, a business might enjoy an economy of scale concerning its bulk purchasing. By buying a large number of products at once, it could negotiate a lower price per unit than its competitors.
Detailed explanation-4: -Economies of scale are cost savings that a company (and, by default, its customers) can reap as a result of efficient production processes. Generally, these cost savings are achieved because the average cost of producing something falls as the volume being produced increases.