Break-even Analysis Fun Quiz

Adam and Vanessa are planning a school event. What is a fixed cost in their break-even analysis?

• A cost that varies with the level of output.

• A cost that remains constant regardless of the level of output.

• A cost that changes with the level of sales.

• A cost that is partially fixed and partially variable.

Answer explanation

In break-even analysis, a fixed cost is defined as a cost that remains constant regardless of the level of output. This means it does not change with production levels, making the correct choice the second option.

Vanessa is organising a school event. Which is a variable cost for the event?

• Rent for the building.

• Salaries of teachers.

• Raw materials for projects and supplies.

• Insurance premiums for buses.

Answer explanation

Raw materials for gadgets and costumes are variable costs because they fluctuate based on production needs. In contrast, rent, salaries, and insurance are fixed costs that remain constant regardless of operations.

How do Grace and Adam calculate the break-even point in units for their lemonade stand?

Answer explanation

The break-even point in units is calculated using the formula \( \frac{\text{Fixed Costs}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}} \). This shows how many units must be sold to cover fixed costs.

Rebecca and Mo are running a small business. What does the margin of safety represent in their break-even analysis?

• The difference between total revenue and total costs.

• The amount by which sales can drop before reaching the break-even point.

• The total contribution margin.

• The total fixed costs.

Answer explanation

The margin of safety indicates how much sales can decline before reaching the break-even point, ensuring the business remains profitable. Thus, the correct choice is the amount by which sales can drop before the business reaches its break-even point.

Maria is planning a school event. Which describes the costs of organising the event?

• Costs that do not change with the number of attendees.

• Costs that vary directly with the number of attendees.

• Costs that have both fixed and variable components.

• Costs that are incurred only when the event starts.

Answer explanation

The costs of running a superhero team include fixed costs (like salaries) that remain constant and variable costs (like equipment) that change with the number of missions. Thus, the correct choice is costs that have both fixed and variable components.

Rebecca and Harry are organising a school fair and are selling merchandise. What is the formula for calculating the total contribution of merchandise sales?

• Total Revenue - Total Costs

• Total Sales - Fixed Costs

• Total Sales - Variable Costs

• Total Revenue - Fixed Costs

Answer explanation

The correct formula for calculating a superhero's merchandise contribution is Total Sales - Variable Costs. This accounts for the direct costs associated with producing the merchandise, giving a clearer picture of profitability.

Rebecca and Maria are running a lemonade stand. What does the intersection of the total cost and total revenue lines represent?

• The area of profit.

• The area of loss.

• The break-even point.

• The margin of safety.

Answer explanation

The point where the total cost line intersects the total revenue line represents the break-even point. At this point, the lemonade stand covers all its costs, resulting in neither profit nor loss.

Darcie sells 250 potions for £5000. What is the price per potion?

• £10

• £15

• £20

• £25

Answer explanation

To find the selling price per potion, divide the total earnings (£5000) by the number of potions sold (250). £5000 ÷ 250 = £20. Therefore, the selling price per potion is £20.

Shalom and Alyssa are using a project management tool for their group assignment. What is a limitation of using this tool?

• It helps in setting project goals.

• It assumes all tasks are completed successfully.

• It assists in monitoring project performance.

• It provides a clear area of project success and failure.

Answer explanation

The limitation of using a magic wand is that it assumes all spells cast are successful, which is unrealistic. Not every magical attempt will yield the desired outcome, highlighting the potential for failure.

How should Mustafa calculate the margin of safety in units?

• Total Sales - Break-even Sales

• Total Revenue - Total Costs

• Total Contribution - Fixed Costs

• Total Sales - Total Revenue

Answer explanation

The margin of safety in units is calculated by subtracting break-even sales from total sales. This shows how many units can be sold before reaching the break-even point, making "Total Sales - Break-even Sales" the correct choice.