Break Even knowledge check

What does break even point show?

• where a business is neither making a profit or loss
• how many items to make
• how much profit they're making
• where a business has more fixed costs than variable

What assumption does this statement say "Break even is 54 units"?

• if we sell 55 we aren't making a profit

• if we sell 54 we begin to make a profit

• if we sell 55 we begin to make a profit

• if we sell 54 we are not yet at break even point

Some business costs are classified as fixed costs because they

• must be paid within a set time
• don't change when sales go up or down
• are unpredictable and must be estimated
• cost all businesses the same amount

A business that does not reach break-even will

• go bankrupt
• have profit and loss
• lose money
• need to relocate

Businesses calculate break-even in units so they know

• how much profit they will earn after they break even
• which products they should purchase for resale
• which costs are variable and which are fixed
• how many products they must sell to break even

What is represented by the space below the break-even point on a break-even graph?

• Profit

• Loss

• Fixed costs

• Variable costs

How is the break-even point displayed on a break-even graph?

• As the highest point on the graph

• As the point where revenue and total costs lines cross

• As a straight line across the graph

• As the lowest point on the graph

Which of the following is an example of a fixed cost for a cafe?

• Managers' salaries

• Workers' wages

• Coffee

• Cakes

What is the formula for Revenue?

• Price x Quantity sold

• Fixed costs + Variable costs

• Costs x Quantity

• Income stream

The break-even formula is

• Fixed costs / (variable costs - total costs)

• Fixed costs / (selling price - variable costs)

• Contribution / by fixed costs

• Fixed costs - revenue