Finance For Busines - Part 2 - Break Even

Which one of the following would be included in the calculation of total costs?

• Selling price

• Rent of premises

• Revenue

• Refund to a customer

Which one of the following statements is true about break-even point?

• Total costs are less than total revenue

• Variable costs are equal to total revenue

• Total costs are equal to total revenue

• Total costs are greater than total revenue

Which two of the following statements are true about a break-even chart?

• The fixed cost line is a horizontal straight line

• The total cost line starts at zero and slopes upwards

• The variable cost line starts at fixed costs and slopes upwards

• The revenue line starts at zero and slopes upwards

Gemima sells dolls houses at £50 each. Each dolls house costs her £32 to make. Her fixed costs are £2700. How many dolls houses must Gemima make in order to break-even?

Break-even = fixed cost

Selling price per unit - variable cost per unit

• 150

• 22

• 19

• 20

Gemima's dolls houses are very popular, she is considering setting her selling price to £55. If she does this what would happen to her break-even point?

• Would increase

• Would decrease

• Would stay the same

Bart is planning on opening an ice cream parlour. After carrying out some research a friend has presented him with a break-even chart but he is unsure of what it means.

He has asked you to show him where the break-even point is.

• 1

• 2

• 3

• 4

Bart is planning on opening an ice cream parlour. After carrying out some research a friend has presented him with a break-even chart but he is unsure of what it means.

He has asked you to show him where he will make a profit.

• 1

• 2

• 3

• 4

Bart should break-even at 600 ice creams per month. He believes that he can sell 850 ice creams per month. What is his margin of safety?

• 250

• 1450

• 150

• 50

Bart has found a cheaper supplier of ice cream. His friend tells him that this is a good idea because it means both his break-even point and margin of safety will go down. Bart is confused as to whether this is true or false. He has asked you to help.

• True

• False

Frederick is revising his formulae for a test on break-even. He has mixed up his revision notes. What is the formulas for Margin of safety

• Total revenue - total cost

• Fixed cost + variable cost

• Actual output - break-even point

• Total revenue = total cost