CA Inter P4 · Chapter 13 · Question 8 of 10
On a break-even chart, a large angle of incidence indicates that:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The business earns profit at a high rate once fixed costs are covered
Explanation
The angle of incidence is the angle at which the sales line cuts the total cost line. A large angle means a high rate of profit after the break-even point, reflecting a high contribution (P/V) ratio. A small angle indicates that profits rise slowly with sales.
More Marginal Costing MCQs
- Q10Method I of production has fixed costs of ₹3,00,000 and variable cost of ₹45 per unit. Method II has fixed costs of ₹4,80,000 and variable…
- Q1A product sells at ₹250 per unit with a variable cost of ₹160 per unit. The P/V ratio is:
- Q2For the same product (selling price ₹250, variable cost ₹160 per unit), fixed costs are ₹10,80,000 per annum. The break-even sales are:
- Q3With break-even sales of ₹30,00,000 and a P/V ratio of 36%, actual sales for the year are ₹40,00,000. The profit for the year is:
- Q4Sales and profit of a company for two periods were: Period 1 sales ₹12,00,000, profit ₹1,10,000; Period 2 sales ₹15,00,000, profit…