IB Business Management - 5.5 Breakeven Quiz

What is the formula for contribution per unit?

• Selling price – Variable cost per unit

• Total revenue – Total costs

• Fixed costs – Variable costs

• Selling price × Quantity

If a company sells 1,000 units at $20 each and incurs variable costs of $8 per unit, what is the total contribution?

• $8,000

• $12,000

• $20,000

• $28,000

A business has fixed costs of $50,000, sells products at $25 per unit, and incurs variable costs of $10 per unit. What is the contribution per unit?

• $10

• $15

• $25

• $50

If total contribution is greater than fixed costs, what does this imply for the business?

• The business is operating at a loss

• The business has reached break-even

• The business is making a profit

• The business has negative cash flow

Which of the following best describes total contribution?

• Fixed costs + Profit

• Selling price × Quantity

• Contribution per unit × Quantity

• Total revenue – Total costs

On a break-even chart, which line starts at the origin?

• Total revenue

• Fixed costs

• Total costs

• Profit

If a company sells 500 units, has fixed costs of $3,000, variable costs of $5 per unit, and a selling price of $20 per unit, what is the break-even quantity?

• 200 units

• 300 units

• 500 units

• 800 units

What happens when total revenue equals total costs?

• The business is making a loss

• The business is breaking even

• The business is making a profit

• The business is in decline

If the break-even quantity is 1,200 units and the company sells 1,500 units, what does this imply?

• The business is at break-even

• The business is making a loss

• The business is making a profit

• The business is not covering its costs

What is the formula for break-even quantity/output?

• Fixed costs ÷ Contribution per unit

• Variable costs ÷ Fixed costs

• (Selling price – Variable costs) × Quantity

• Total revenue – Total costs