Which of the following statements are true and which are false? Fill in the foll

Question

Which of the following statements are true and which are false? Fill in the following table. Working capital is a variable cost. Optimal volume (demand) occurs when total costs equal total revenues. Goods and services have utility because they have the power to satisfy human wants and needs The fixed return on borrowed capital (i.e., interest) is more risky than profits paid to equity investors (i.e., stockholders) in a firm. Overhead costs normally include all costs that are not direct costs High breakeven points in capital intensive industries are desirable.

Explanation / Answer

1. This is False. Working capital is an asset and is a balance sheet item.

2. This is False. This is the break even output level.

3. This is True. Good and services enhance utility.

4. This is False. This may not always be true.

5. This is False. They will include labour costs.

6. This is True.

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