Break-Even

At the break-even point which of the following is true?

• Total revenue > total cost

• Total revenue = total cost

• Total cost > total revenue

• Total cost = 0

If Mr. Edwards had a fixed cost of $500 and a variable cost of $5 per chair and he produced 20 chairs. His total cost would be

• $500

• $550

• $600

• $505

The formula for total cost =

• Fixed cost x variable cost

• Fixed cost - variable cost

• Variable cost - fixed cost

• Fixed cost + variable cost

Fixed costs are costs that do no change with

(a)  

The formula for margin of safety =

• Actual sales - break even

• Total cost - Total revenue

• Break-even - actual sales

• Total revenue - total cost

NWA needs to provide flights for (a)   customers to break-even

Given that the airline is operating at full capacity, meaning that maximum number of customers is NWA's actual number of customers. The margin of safety is

(a)  

Which of the following is NOT a limitation of break-even analysis?

• BE analysis assumes that the company will sell all stock at the same price

• Variable costs may change, making analysis incorrect

• Some businesses sell more than one product so BE becomes difficult to calculate

• Helps businesses know how much must be sold in order to be profitable

Which of the following is NOT an advantage of Break-even analysis

• It assumes all output is sold at the same price

• It tells how much output needs to be sold to make profit

• It gives an indication of whether a project is too risky or not

• It tells how much revenue a company will make at each level of output