BUSOBA 2321 EXAM 1 EXAM WITH CORRECT
ACTUAL QUESTIONS AND CORRECTLY WELL
DEFINED ANSWERS
Play your way to mastery with fun games
Match Blocks Charms NEW
Terms in this set (58)
indifference point -effective tool when making a decision between 2
options
- same value for the competing options
-cost or profit is the same at a specific quantity (set
equal to each other)
-decisions only change at an indifference point
- when slope/contribution profit is the same, the
lines will never cross and there will be no
indifference point. one line will always be higher
than the other
, indifference table 1. set the alternative equations equal to each other,
finding the indifference points
2. place the indifference points into a table in
ascending order
3. choose the test points
4. calculate the costs/profit for EACH alternative
5. find HIGHEST PROFIT or LOWEST COST and that
is the decision you will make in each range of
quantity
6. make the decision rules; can combine
consecutive options
How many indifference possibilities # of pairs = k(k-1) / 2 where k = # of options
are there?
breakeven point -breakeven is the level of production and sales at
which revenue and cost equal each other.
-this crossover analysis enables a company to
identify the point (in number of units) where they
would be indifferent to the costs generated by the
two different machines.
-BC profit equals zero, contribution margin will only
need to cover FC
ACTUAL QUESTIONS AND CORRECTLY WELL
DEFINED ANSWERS
Play your way to mastery with fun games
Match Blocks Charms NEW
Terms in this set (58)
indifference point -effective tool when making a decision between 2
options
- same value for the competing options
-cost or profit is the same at a specific quantity (set
equal to each other)
-decisions only change at an indifference point
- when slope/contribution profit is the same, the
lines will never cross and there will be no
indifference point. one line will always be higher
than the other
, indifference table 1. set the alternative equations equal to each other,
finding the indifference points
2. place the indifference points into a table in
ascending order
3. choose the test points
4. calculate the costs/profit for EACH alternative
5. find HIGHEST PROFIT or LOWEST COST and that
is the decision you will make in each range of
quantity
6. make the decision rules; can combine
consecutive options
How many indifference possibilities # of pairs = k(k-1) / 2 where k = # of options
are there?
breakeven point -breakeven is the level of production and sales at
which revenue and cost equal each other.
-this crossover analysis enables a company to
identify the point (in number of units) where they
would be indifferent to the costs generated by the
two different machines.
-BC profit equals zero, contribution margin will only
need to cover FC
