Break-even

What does a break-even diagram help to interpret?

• The impact of changes in revenue and costs

• The total sales volume

• The maximum profit

• The minimum costs

What happens to the break-even output level if costs rise?

• It decreases

• It remains the same

• It increases

• It becomes zero

What is the effect of increasing fixed costs on the break-even point?

• It lowers the break-even point

• It raises the break-even point

• It has no effect

• It eliminates the break-even point

How does a decrease in variable costs affect the break-even output?

• It increases the break-even output

• It decreases the break-even output

• It has no effect

• It doubles the break-even output

What is the relationship between total costs and total revenue at the BEO?

• Total costs are higher than total revenue

• Total costs are lower than total revenue

• Total costs equal total revenue

• Total costs are zero

In a break-even analysis, what does a higher margin of safety indicate?

• Greater risk of loss

• Greater financial stability

• Lower revenue

• Higher costs

What is the primary goal of conducting a break-even analysis?

• To increase production costs

• To find the level of sales needed to cover costs

• To reduce employee numbers

• To increase market share

Why does the variable cost (VC) line pivot from the origin?

• Due to changes in fixed costs

• Because of changes in variable costs

• As a result of increased output

• Due to changes in total costs

What impact does an increase in sales price have on the break-even point?

• It has no effect

• It doubles the break-even point

• It raises the break-even point

• It lowers the break-even point

What does a steeper total revenue line indicate in a break-even chart?

• Lower sales price per unit

• Higher sales price per unit

• Higher fixed costs

• Lower variable costs