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.
• E)The cost of goods sold should not be a factor in deciding whether to undertake the project.

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Definitions:

Downstream Transfer

Transactions where a parent company sells or transfers assets to its subsidiary.

Straight-Line Method

An accounting method of depreciation where the value of a fixed asset is reduced uniformly over its useful life.

Consolidated Financial Statement

Financial statements that aggregate the financial position and operational results of a parent company and its subsidiaries.

Gross Profit

The financial result obtained after deducting the cost of goods sold from total sales revenue.