Allied & ICAR Exam Bank • ALLIED_2945 MCQ • 1 Mark

Section 2: Farm Machinery

Farm Machinery

Subtopic: Cost analysis of implements and tractors

Question Statement:

The break-even point ($BEP$) between hiring custom farm machinery vs purchasing an owned machine is the annual acreage where:

Options:

  • (A) Total cost of machine ownership and operation equals the total custom hiring cost
  • (B) Machine value drops to zero
  • (C) Operating profit is maximized
  • (D) Depreciation equals interest

Answer Key:

A

Step-by-Step Solution & Explanation

BEP defines the threshold annual workload beyond which ownership becomes cheaper than hiring.
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