A-LevelAccountingTraditional costing methods9706/12 · Oct/Nov 2016 · Q291 Mark

A company makes a product for which the following information is given. per unit $ selling price 100 direct materials 40 direct labour 30 Total fixed costs are $40000. Planned production is 1000 units. Which action should the company take to break-even?

Adecrease direct labour cost by 30%

Bdecrease direct material cost by 25%

Cincrease direct labour cost by 30%

Dincrease direct materials cost by 25%

✓ Correct answer

B: decrease direct material cost by 25%

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Topic: Traditional costing methods, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Oct/Nov 2016 Paper 1 Variant 2, question 29.

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