Man-Sci

Question 1

“provides valuable information for a manager who must make a yes/no decision concerning production of the product”

Answer 1

BREAKEVEN ANALYSIS

Question 2

COMPONENTS OF BREAKEVEN ANALYSIS

Answer 2

❑ Cost
❑ Volume
❑ Profit

Question 3

❑ The cost of manufacturing or producing a product is a function of
the volume produced.
❑ Fixed cost - is the portion of the total cost that does not depend
on the production volume
❑ Variable cost - is the portion of the total cost that depends on
and varies with the production volume
❑ Marginal cost - is defined as the rate of change of the total cost
with respect to production volume; that is, the cost increase
associated with a one-unit increase in the production volume.

Answer 3

COST AND VOLUME

Question 4

is the portion of the total cost that does not depend on and varies with the production volume

Answer 4

Fixed cost

Question 5

is the portion of the total cost that depends on
and varies with the production volume

Answer 5

Variable cost

Question 6

• is defined as the rate of change of the total cost
  with respect to production volume; that is, the cost increase associated with a one-unit increase in the production volume.

Answer 6

Marginal cost

Question 7

❑ Managers need to know the
profit implications of their
decisions.

Answer 7

Profit & Volume

Question 8

is defined as the
rate of change of total revenue
with respect to sales volume.

Answer 8

Revenue & Volume