SGS Business Unit 1 Finance Knowledge Test

What assumption does this statement say "Break even is 54 units"?

• if we sell 55 we aren't making a profit

• if we sell 54 we begin to make a profit

• if we sell 55 we begin to make a profit

• if we sell 54 we are not yet at break even point

What is the margin of safety?

• the margin between projected units and break even point units
• the margin between profit and loss
• the margin between units and sales
• the margin between each break even point

What is the formula for contribution?

• cost price - selling price

• fixed costs - variable costs

• selling price - variable cost

• selling price - cost price

To draw the BE graph you must plot Total Costs and ........

• Total Production
• Total Revenue
• Total Fixed Costs
• Total Units

What is the break-even point in units for a company whose total fixed costs are £275,450; selling price per unit is £16; and variable cost per unit is £14.75?

• 220,360

• 150,300

• 183,633

• 225,120

Which option is the correct formula to calculate total sales revenue?

• Selling price per unit x output sold

• Total fixed costs + total variable costs

• Unit cost x output

• Total inflows - total outflows

A business has an agreed overdraft limit of £10,000, which it has used 75% of, on average, throughout the year. The interest rate on the overdraft facility is 15% per annum. Which option represents the amount of interest the business paid this year on its overdraft?

• £1,125

• £1,500

• £7,500

• £8,625

Last year, a business made £300,000 profit from sales revenue of £750,000. Its total variable costs equalled £125,000. What was the value of the business’s fixed costs?

• £175,000

• £325,000

• £450,000

• £625,000

If the business in question 7 sold 100,000 units during the year, its variable cost per unit equalled:

• £0.80

• £1.25

• £3.00

• £7.50

A small business has fixed costs of £24,000 and an average sales price per unit of £9. If the variable cost per unit is 1/3 of the sales price per unit, which of the following is the business’s break even point in units?

• 2,000 units

• 2,667 units

• 4,000 units

• 8,000 units