Angle of incidence is the angle between:
ASales line and total cost line
BVariable and fixed line
CSales and variable line
DVariable and total line
Answer & Solution
Correct answer: A. Sales line and total cost line
1. On the break-even chart, the angle of incidence is formed at the BEP itself.
2. It lies between the sales line and the total cost line.
3. A wider angle implies a higher P/V ratio and faster profit growth.
4. Hence the answer is between the sales line and the total cost line.
_Source: ICAI BoS Inter Paper 3, Ch 14 "Marginal Costing", §14.5.4 ¶2_
Related questions
At the break-even point,A higher contribution to sales ratio implies thatIf the margin of safety is 21.875 per cent of sales, break-even sales are what share of saMargin of safety isFixed cost is 1,50,000 and contribution per unit is 15. Units needed to earn a profit of 2Fixed cost is 1,50,000 and contribution per unit is 15. The break-even point in units isSelling price is 30 per unit and variable cost is 15 per unit. The P/V ratio isContribution is defined as