Breakeven Point Practice

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

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

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

The break even level of output for a firm is 800 units and it is currently making 950 units. What is its margin of safety?

• 150 units

• 250 units

• 300 units

• 1750 units