Costing and Breakeven Analysis

What are Fixed Costs?

• the amount of money allocated for a business to use in certain departments

• business costs, such as rent, that do not vary because of the amount of goods produced

• costs that change depending upon the output

• the point in a business when the profits are equal to costs

Which of the following calculations would you use to find total costs?

• Fixed Costs + Variable Costs

• Selling Price – Fixed Costs

• Total Fixed Costs / Selling Price – Variable Cost

• Total Fixed Costs/Variable Cost Per Item

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CCSS.HSF-LE.A.1B

If there was a rise in variable costs what effect would this have on the break even chart?

• total cost line pivots downwards

• fixed cost line and total cost line move upwards in a parallel shift

• total cost line pivots upwards

• revenue line pivots upwards

If there was a fall in fixed costs what impact would this have on the break-even output?

• revenue would increase and tilt the SR line upwards

• break-even is achieved at a lower level of output

• greater output necessary to break-even

• break-even is reached at a higher level of output

On a break-even chart, what line does the total revenue line meet at the break-even point?

• The fixed cost line

• The variable cost line

• The total cost line

• Semi variable cost line

If average variable cost is £10, and average selling price is £25, then what is contribution?

• £35

• £15

• £-15

• £40

If the average variable costs £10, average selling price is £25 and fixed costs are £60,000, then what is the break-even output?

• 5000

• 7000

• 6000

• 4000

What is a business doing when it sells output beyond the break-even point?

• Making a loss

• Making a profit

• Making neither a profit or loss

• It is not possible to tell from the graph

What is the break-even point in units for company where total fixed costs are £275,450

selling price per units £16

variable cost per unit is £14.75

• 220,360

• 183,633

• 150,300

• 225,120

What is the margin of safety?

• The difference between units sold and the break-even amount

• The margin between units and sales

• The margin between each break-even point

• The margin between profit and loss