Entrepreneurship 2 Honors Unit 2 Test

How many tickets must a movie theater sell to break even if it's total fixed costs are $50,000 , the selling price per ticket is $4.50 and the cost per ticket is $2.50 ?

• 42,000

• 35,000

• 25,000

• 40,000

Business calculate the break even in dollars so they know the

• amount of the business's after-tax earnings

• total dollar value of the stock on hand

• total dollar sales needed to reach breakeven

• amount the business can spend on new purchases

Businesses calculate breakeven in units so they know

• how much profit they will earn after they break even

• which products they should purchase for resale

• which costs are variable and which are fixed

• how many products they must sell to break even

How is variable-cost margin calculated?

• Variable costs/number of units sold

• Variable costs per unit - selling price per unit

• variable costs + fixed costs

• Fixed costs/variable costs

How does calculating breakeven affect a business's decision to provide incentives for their employees?

• It provides a comparison of different types of incentives

• It estimates the profit employees will earn from each incentive

• It shoes the business when it can afford to offer incentives

• It shows whether employees qualify to receive incentives

One of the purposes of calculating breakeven is to help the business

• determine stock value

• prepare an income statement

• forecast sales

• set selling prices

A business that does not reach breakeven will

• go bankrupt

• have profit and loss

• lose money

• need to relocate

Business can increase their income from sales by

• increasing their selling prices

• controlling their costs

• reducing the number of sales

• paying smaller divdends

If a business's sales double, its variable costs will most likely

• remain the same

• decrease

• increase

• double

When a business has made enough money to pay its costs and begin _________

• break even point

• variable cost margin

• fixed costs

• selling price