Breakeven Analysis

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

• TRUE

• FALSE

An example of a fixed expense would be a 5% sales commission.

• TRUE

• FALSE

Maintenance and rent are often fixed expenses.

• TRUE

• FALSE

Variable costs change in total as volume changes.

• TRUE

• FALSE

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

• TRUE

• FALSE

A retailer's cost of goods sold is an example of a variable expense

• TRUE

• FALSE

Break-even point is the point where revenues equal the total of all expenses including the cost of goods sold.

• TRUE

• FALSE

The break-even point in peso of revenues is equal to the total of the fixed expenses divided by the contribution margin per unit.

• TRUE

• FALSE

Contribution margin is defined as sales (or revenues) minus variable expenses.

• TRUE

• FALSE

If a company requires a profit of $30,000 (instead of breaking even), the $30,000 should be combined with the fixed expenses in order to compute the point at which the company will earn $30,000.

• TRUE

• FALSE