Q1. What is break even point ? (1 mark)
Ans. Break even point is a state of business where cost is equal to revenue, i.e., no profit no loss stage.
Q2. Give the formula of unit price and unit cost. (2 marks)
Ans. Unit Price = Total sales / No. of units sold Unit Cost = Total cost / No. of units.
Q3. How does break even analysis help ? (2 marks)
Ans. It helps in setting profit goals and sales targets. In a manufacturing environment, it helps in determining the products that are not contributing to meet the fixed expenses and thus bring up the item for discussion in management meetings about its continuity.
Q4. What is sales mix ? (1 mark)
Ans. It is the proportion in which two or more products are sold.
Q5. Which is the method for calculating break-even point of sales mix ? (1 mark)
Ans. Contribution approach method.
Q6. What do you mean by Unit of Sales ? (1 mark)
Ans. Unit of Sales can be defined as a measure of what products are sold.
Q7. What do you mean by Gross Profit ? (2 marks)
Ans. Excess of Unit Price Over Unit Cost is known as the Unit Gross Profit or Unit Gross Margin. This represents the business’s profit from selling a product or providing service before deducting fixed expenses such as salaries, rent and other expenses.
Gross Profit = Unit Price – Unit Cost
Q8. What do you understand by Unit Cost / Variable Cost / Cost of goods sold ? (1 mark)
Ans. Cost of unit can be defined as the cost incurred by a company to produce, store and sell one unit of sale of a particular product or service.
Q9. Give few examples of Variable Cost/Unit Cost. (1 mark)
Ans. Raw material, commission on sales, packing material, etc.
Q10. What is MRP ? (1 mark)
Ans. MRP (Maximum Retail Price) is a price at which shopkeeper sells the goods to the customers.
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