1. In a factory operating at capacity, not every machine and person should be working at the maximum possible rate.

a. True

b. False

2. The cost of factory machinery purchased last year is:

a. an opportunity cost.

b. a differential cost.

c. a direct materials cost.

d. a sunk cost.

3. Which of the following is NOT a correct definition of the break-even point?

a. the point where total sales equals total expenses.

b. the point where total profit equals total fixed expenses.

c. the point where total contribution margin equals total fixed expenses.

d. the point where total profit equals zero.