Break-even Analysis Quiz

What is the break-even point in a business?

• The point at which a business is not making a loss but neither is it making a profit

• The point at which a business is bankrupt

• The point at which a business is making a loss

• The point at which a business is making a profit

How do you calculate revenues in break-even analysis?

• By subtracting the variable costs from the fixed costs

• By multiplying the selling price per unit by the number of units sold

• By dividing the total costs by the number of units sold

• By adding the fixed costs to the variable costs

What are variable costs in break-even analysis?

• Costs that are not considered in the analysis

• Costs that are always zero

• Costs that do not vary in relation to output

• Costs that vary in relation to output

How do you calculate the breakeven output?

• Multiply fixed costs by the contribution per unit

• Divide fixed costs by the contribution per unit

• Add fixed costs to the contribution per unit

• Subtract fixed costs from the contribution per unit

What is the margin of safety in break-even analysis?

• The difference in units between actual production/sales and the breakeven output

• The difference in units between profit and loss

• The difference in units between total costs and total revenues

• The difference in units between variable costs and fixed costs

What does a positive margin of safety indicate for a business?

• The business is at the breakeven point

• The business is making losses

• The business is profitable

• The business is bankrupt

How can a business improve its margin of safety?

• By decreasing the actual output

• By increasing the fixed costs

• By decreasing the selling price per unit

• By increasing the contribution per unit

What is the formula to calculate profit using the margin of safety?

• Profit = Margin of safety in units - Contribution per unit

• Profit = Margin of safety in units + Contribution per unit

• Profit = Margin of safety in units / Contribution per unit

• Profit = Margin of safety in units * Contribution per unit

What is the key point to remember about a business's profitability and the margin of safety?

• A business that operates with a negative margin of safety is at the breakeven point

• A business that operates with a positive margin of safety is making losses

• A business that operates with a negative margin of safety is profitable

• A business that operates with a positive margin of safety is profitable

What is the significance of the margin of safety in break-even analysis?

• It helps in analyzing how a business can improve its profitability

• It helps in calculating the total costs of a business

• It helps in determining the selling price per unit

• It helps in identifying the fixed costs of a business