Break Even Analysis

What is the break even point?

• A pont that breaks evenly

• The point were total cost and total revenue are balanced

• The point where the company makes profit

• The point were total cost and total revenue are unbalanced

How do you calculate the break even point?

• $BEP=\frac{Fixed\ Cost}{Contribution\ per\ Unit}$

• $BEP=\frac{Contribution\ per\ Unit}{Fixed\ Cost}$

• $BEP\ =\ Fixed\ Cost\ \cdot\ Contribution\ per\ Unit$

When a company reaches the Break Even point they...

• Can start making profit

• Sell the company

• Start overproducing

• Have covered their fixed costs

A company's break even point is 90 pizzas. If they sell 130 pizzas what is their margin of safety for next week?

• 80

• 40

• 90

• 30

Where is the break even point?

• A

• B

• C

• D

Which of this shows an increase in fixed costs?

• 
• 
• 

If a company where to sell a product at the same price it cost to produce what would the Contribution per Unit?

• 0

• 10

• -20

• -10

Which of the following is a limitation of the break even analysis?

• Total revenue and total cost may not always be linear

• All economies of scale are taken into account

• Total revenue and total cost are always linear

• It assumes there is unlimited inventory

With the following information, calculate the break-even point.

Fixed costs = $300

Selling price = $15

Variable costs = $10

Output = 140 units

• 100

• 40

• 60

• 120

TOK question

What type of reasoning is needed to make a break even analysis?

• Inductive

• Deductive

• Mathematical

• Analytic