Risk & Project Valuation - 1

Fixed costs change as the number of sales increases.

• True

• False

Variable costs depend on the number of sales.

• True

• False

Selling price per unit means the total of all sales.

• True

• False

A loss is made until the break-even point is reached.

• True

• False

Raw materials are an example of fixed costs.

• True

• False

Rent is an example of a fixed cost.

• True

• False

If a company 'breaks even' then this means that they are making neither a profit or a loss.

• True

• False

If the selling price per unit is $ 100 and contribution per unit is $ 75, what are the total variable costs if 150 units are sold?

• $ 11,250

• $ 15,000

• Not possible to calculate

• $ 3,750

What happens to break-even output if contribution per unit increases and fixed costs stay the same?

• It stays the same

• It is cancelled out

• It increases

• It falls

Use these figures to calculate profit: fixed costs $ 14,750, SP $ 9 per unit: VC per unit $ 4; Units made and sold 3,500.

• $ 16,750

• - $ 750

• $ 2,750

• - $ 2,750