Cash break-even point uses:
ASales only
BFixed cost gross
CVariable cost only
DFixed cost net of non-cash items
Answer & Solution
Correct answer: D. Fixed cost net of non-cash items
1. Cash BEP focuses on the cash needed to cover ongoing cash outflows.
2. Non-cash fixed costs such as depreciation are subtracted from total fixed cost.
3. The lower numerator gives a lower cash BEP than accounting BEP.
4. Hence cash BEP uses fixed cost net of non-cash items.
_Source: ICAI BoS Inter Paper 3, Ch 14 "Marginal Costing", §14.5.3 ¶2_
Related questions
Absorption costing values inventory at:Marginal costing assumes fixed cost remains constant:Make-or-buy decision prefers buying when the outside price is:Limiting-factor decision picks the alternative that maximises:Angle of incidence is the angle between:Composite P/V ratio for a mix of Product A (P/V 50%, share 40%) and B (P/V 30%, share 60%)Continuing same data: MOS in rupees and as a percentage of sales:Selling price ₹40, variable cost ₹25, fixed cost ₹3,00,000. MOS at actual sales of 30,000