Suppose a manager decides to sell a special order at the breakeven price. However, he is concerned that the organization could lose money if there are any errors in the analysis. About which factor should the manager be concerned?
A) The accuracy of the cost function
B) Current demand
C) Opportunity costs
D) Sunk costs

Question

Quizplus · Accepted Answer

The manager should be concerned about the accuracy of the cost function, as selling at the breakeven price requires a precise understanding of the organization's costs. If the cost function is inaccurate, the organization could end up losing money on the special order. Current demand, opportunity costs, and sunk costs are not directly relevant to determining the breakeven price.

Suppose a Manager Decides to Sell a Special Order at the Breakeven