Use the Figure for the Question(s)below

question 66

Multiple Choice

Use the figure for the question(s) below.
-The graph above shows the break-even analysis for the cost of making a certain good.Based on this chart,which of the following is true?

• A)The net present value (NP
• V)of the project increases with increased cost of goods sold.
• B)The project should not be undertaken if the predicted cost of goods sold is less than $110.
• C)The net present value (NP
• V)of the project will be positive if the cost of good sold is greater than $110.
• D)If the good costs $110 to make,the net present value (NP
• V)of the project will be zero.

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Definitions:

Direct Material

Raw materials that can be directly traced to the production of a specific product and are a significant component of its cost.

Variable Overhead

Costs of overhead that vary directly with the level of production, such as utilities or indirect materials.

Power Cost

The expense associated with the consumption of electrical energy by a company's operations.

Efficiency Variances

These variances measure the difference between the actual input used to produce a good or service and the standard input expected to be used, showing how efficiently resources are utilized.