breakeven Jan 4

Which are fixed costs ?

• materials, packaging

• rent, insurance

• production labour wages, energy

• delivery fuel, postage

Selling price = £12 and variable cost per unit = £8, therefore

• unit contribution = £20

• unit contribution = £4

• unit contribution = £96

• unit contribution = £1.50

Fixed costs = £32,000 and unit contribution = £4, therefore

• breakeven = 36000 units

• breakeven = 32000 units

• breakeven = 8000 units

• breakeven = 128000 units

Sales = 15,000 units and breakeven = 8000 units, therefore

• margin of safety = 120,000 units

• margin of safety = 70,000 units

• margin of safety = 7,000 units

• margin of safety = 23,000 units

Breakeven assumes all output is :

• seized

• sent

• sold

• second-rate

Profit = total revenue

• plus total costs

• minus total costs

• multiplied by total costs

Which of the following would increase the unit contribution ?

• lower selling price

• higher variable cost per unit

• lower variable cost per unit

Which would reduce the amount needed to breakeven ?

• lower selling price

• higher variable cost per unit

• higher fixed costs

• higher selling price

You can calculate profit by using the formula : margin of safety x

• price

• unit contribution

• fixed costs

Which might your breakeven prediction be wrong ?

• your pen ran out

• your pencil broke

• costs increased

• your spreadsheet vanished