Break Even Word Problems

What are the total variable costs if output is zero?

• Equal to contribution per unit.

• Zero

• Equal to fixed costs.

• Equal to selling price per unit.

What is a business doing at the break even point?

• Making a loss

• Producing the startup output

• Making neither a profit nor a loss

• Making a profit.

What is the correct definition of the break even point?

• The point at which sales revenue = fixed costs

• The difference between selling price and the total variable costs

• The revenue gained from selling every unit of output made

• The total sales needed to cover the total costs of the business

Which of the following is a limitation of using break even analysis?

• The business may change its selling price

• The product may become more fashionable

• Takes no account of the credit crunch

• A new market entrant will affect the level of demand

Total contribution = ?

• Total sales less total variable costs

• Total sales less fixed costs

• Variable costs less fixed costs

• Total selling price less fixed costs.

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

When does the break-even point fall?

• When fixed costs rise

• When depreciation increases

• When the selling price decreases

• When fixed cost fall.

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

What happens to fixed costs if there is a decrease in contribution per unit?

• Fixed costs decreases

• The margin of safety falls

• Fixed costs increases

• No-change fixed costs are not affected.