The following breakeven chart has been drawn for a company’s single product:
Which of the following statements about the product are correct?
(i) The product’s selling price is $10 per unit.
(ii) The product’s variable cost is $8 per unit.
(iii) The product incurs fixed costs of $30,000 per period.
(iv) The product earns a profit of $70,000 at a level of activity of 10,000 units.
Statement (i) is correct. The line which passes through the origin indicates the sales revenue at various levels of activity. At an activity level of 10,000 units, the sales revenue is $100,000, therefore the selling price is $10 per unit.
Statement (ii) is incorrect. The sloping line which intercepts the vertical axis at $30,000 shows the total cost at various levels of activity. The total cost for 10,000 units is $80,000, from which we subtract the $30,000 fixed costs.
Statement (iii) is correct. The fixed cost is the cost incurred at zero activity, and is shown as a horizontal line at $30,000.
Statement (iv) is incorrect. The profit for 10,000 units is the difference between the sales value $100,000 and the total cost of $80,000, which amounts to $20,000.
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A government is trying to assess schools by using a range of financial and non-financial factors. One of the chosen methods is the percentage of students passing five exams or more.
Which of the three Es in the value for money framework is being measured here?
The following statements have been made about measuring performance in not-for-profit organisations:
(1) Output does not usually have a market value, and it is therefore more difficult to measure effectiveness.
(2) Control over the performance can only be satisfactorily achieved by assessments of ‘value for money’.
Which of the above statements is/are true?
The senior manager is suspicious of a local manager’s accounts and thinks that the profit performance may have been overstated.
Which of the following would be a plausible explanation of an overstatement of profit?
Which of the following statements regarding standard setting is correct?
When setting performance measurement targets it should be considered that there is the possibility that managers will take a short term view of the company and may even be tempted to manipulate results in order to achieve their targets.
Which of the following would assist in overcoming the problems of short-termism and manipulation of results?
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