Name two advantages and two disadvantages associated with the use of break-even analysis.
What will be an ideal response?
Advantages of using break-even analysis include that it (1) provides a quick estimate of how much the firm must sell to break even, (2) provides information about how much profit can be earned if higher sales volume is obtained, and (3) reduces the dependence on marginal cost and revenue data, which are frequently unavailable.
Disadvantages of using break-even analysis include that (1) it is difficult to know whether a cost is fixed or variable and (2) failure to account for the concept of demand. For example, a firm may not be able to sell the break-even number of units because demand may be limited to fewer units.
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When provided with an offer of a 10% discount to purchase 10,000 electronic calculators within the next 30 days, Target buys 30,000 instead to take advantage of the price discount
Target will offer the calculator to consumers at a discount during the special sale, but then have additional calculators to sell when the sale is over. This is an example of: A) an off-invoice allowance B) slotting fee C) forward buying D) diversion
Explain the DADA Syndrome.
What will be an ideal response?
Agnes purchased a computer for $2,240. It has an estimated useful life of four years and an estimated residual value of $240. The entry to record the depreciation charge for the first year using the double-declining-balance method is:
A) Depreciation Expense-Computer 1,120 Accumulated Depreciation-Computer 1,120 B) Depreciation Expense-Computer 2,000 Accumulated Depreciation-Computer 2,000 C) Depreciation Expense-Computer 1,000 Accumulated Depreciation-Computer 1,000 D) Computer 2,000 Cash 2,000
During the month, a company was informed that a check they had issued was accidentally destroyed. On the bank reconciliation, the company would
A) deduct the amount from the balance per the company's records B) deduct the amount from the balance per the bank statement C) Add the amount to the balance per the bank statement D) Add the amount to the balance per the company's records