N5 Breakeven

What does break-even analysis help a business to identify?

• The total costs of production

• The best marketing strategy

• The highest price point for a product

• If it is likely to make a profit or not

What happens if a business sells a product for below the break-even price?

• It makes a profit

• It breaks even

• It makes a loss

• It increases production

What are fixed costs?

• Costs that vary depending on production levels

• Costs that remain constant regardless of production levels

• Costs that include raw materials and inventory

• Costs that only occur once production starts

What does the break-even chart visually demonstrate?

• The total investment needed to start a business

• The relationship between fixed costs and variable costs

• The point where total revenue and total cost lines meet

• The maximum profit a business can make

Why does total cost not fall to zero when nothing is made?

• Because of the initial investment in the business

• Because fixed costs still need to be paid

• Because of the ongoing marketing expenses

• Because of the high variable costs

What is the primary purpose of calculating the break-even point?

• To determine the minimum sales volume needed to avoid losses

• To identify the most effective marketing channels

• To calculate the total variable costs

• To set the highest possible price for a product

How do variable costs behave as production increases?

• They decrease

• They remain constant

• They increase

• They are not related to production levels

How do fixed costs impact the break-even point?

• Higher fixed costs lower the break-even point

• Fixed costs have no impact on the break-even point

• Lower fixed costs increase the break-even point

• Higher fixed costs increase the break-even point