If a Manufacturer's Cost of Direct Material Increases,how Will This

question 39

Multiple Choice

If a manufacturer's cost of direct material increases,how will this affect breakeven point?

• A)no effect
• B)decrease
• C)increase
• D)unable to determine from the information given

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Definitions:

Discount Rate

An interest rate used to discount future cash flows to their present value, often applied in capital budgeting and investment valuation.

Working Capital

A financial metric representing the difference between a company's current assets and current liabilities, indicating its short-term liquidity.

Salvage Value

The calculated leftover value of an asset at the expiry of its service life.

Straight-Line Method

A depreciation method that allocates an equal amount of depreciation expense for an asset over its useful life.