Break-even and contribution

Fixed costs do not change in total when there is a small change in sales.

• True

• False

An example of a fixed expense would be...

• Raw materials

• Rent

• Sales commission on each sale

• Packaging

Property taxes and marketing are often fixed costs.

• True

• False

An example of a variable expense is an office manager's monthly salary.

• True

• False

What definition is this?

The money left on the sale of one unit, after all variable expenses have been subtracted from the related revenue.

• Break-even

• Total contribution

• Contribution per unit

• Margin of safety

Break-even point is the point where revenues equal the total fixed costs.

• True

• False

A business is selling their product for $10. Their variable cost are $4 per unit and fixed costs are $1500. They sell 1,000 per month. What is the contribution per unit?

• $6

• $4

• $500

• 1000 items

A business is selling their product for $10. Their variable cost are $4 per unit and fixed costs are $1500. They sell 1,000 per month. What is the total contribution?

• $4

• $10

• $1500

• $6000

A business is selling their product for $10. Their variable cost are $4 per unit and fixed costs are $1500. They sell 1,000 per month. What is the profit or loss?

• $6 profit

• $500 profit

• $500 loss

• $4500 profit

A business is selling their product for $10. Their variable cost are $4 per unit and fixed costs are $1500. They sell 1,000 per month. What is the break-even point?

• $250

• 250 units

• $15

• 15 units