BTEC UNIT 2: FINANCE FOR BUSINESS - LA B D1

What is the breakeven point in a business context?

• When revenue is greater than expenditure

• When income and expenditure are equal

• When revenue is less than expenditure

• When a business starts making a profit

What is the margin of safety in a breakeven chart?

• The difference between actual sales and breakeven sales

• The total fixed costs

• The variable cost per unit

• The selling price per unit

What is the significance of the breakeven point?

• It is the point where total revenue equals total costs

• It is the point where profit is maximized

• It is the point where variable costs are minimized

• It is the point where fixed costs are zero

What is the result of a decrease in sales on the margin of safety?

• The margin of safety increases

• The margin of safety decreases

• The margin of safety remains the same

• The margin of safety is eliminated

What happens to the profit level if the number of sales required to break-even increases?

• The profit level increases

• The profit level remains the same

• The profit level falls or becomes a loss

• The profit level is unaffected

Why is it important for business people to plan?

• To avoid paying taxes

• To ensure they have enough employees

• To be successful

• To increase their personal wealth

What does breakeven analysis help to calculate?

• Employee salaries

• Projected sales revenue

• Market share

• Customer demographics

What action must be taken if sales fall or costs increase?

• No action is needed

• Action must be taken before a loss occurs

• Increase advertising

• Hire more employees

What is a risk of not taking action when a business makes a loss over time?

• The business makes a loss over a long period of time without any action being taken.

• The business always makes a profit.

• The business loss is temporary and irrelevant.

• The business loss is always recoverable.

How can a business increase its margin of safety?

• By increasing the breakeven point

• By decreasing sales price

• By reducing variable costs

• By increasing fixed costs