L2 Business B1

What is the definition of breakeven?

• When a business sells a new product to make an income

• When a business has higher revenue than costs

• When a business has made enough money through product sales to cover the cost of making the product (no profit and no loss)

• When a business has higher costs than revenue

What is the correct formula for breakeven?

• Fixed costs (Divide)

  Selling price - variable costs

• Fixed costs (Multiply)

  Selling price - variable costs

• Revenue - total costs

• total costs - revenue

What does the green line represent on the breakeven chart?

• Sales revenue

• Total costs

• Fixed costs

• Break even point

What does the blue line represent on the breakeven chart?

• Sales revenue

• Total costs

• Fixed costs

• Break even point

What does the red line represent on the breakeven chart?

• Sales revenue

• Total costs

• Fixed costs

• Break even point

When which two colours cross is the break even point?

• Blue and Red

• Red and Yellow

• Blue and Green

• Green and Red

What is a margin of safety?

• When revenue is greater than the costs to a business

• When fixed costs and variable costs are added together

• The point where the sales revenue line crosses the total costs line and shows the number of sales needed to break-even

• The amount by which sales would have to fall before the break-even point is reached

If there is an increase in sales, what else does this increase within the break-even analysis?

• Margin of Safety

• Costs

If costs decrease, what does this do to the breakeven point?

• Makes it higher

• Makes it lower

Benefit of using break even analysis or risk of not using it - the business makes a loss over a long period of time without any action being taken?

• Benefit

• Risk