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WorksheetsBreak Even Exam Questions BTEC Foundation Diploma(1)
Total questions: 10
Worksheet time: 9mins
Use the following data to answer the question below
Fixed costs: = £30,000
Variable cost: = £200 per photo shoot
Forecast output (Sales): = 140 photo shoots
Selling price: = £1000 per photo shoot
What is the total contribution? (3 marks)
£800
£140 000
£112 000
£32 000
Kiran has worked out the following figures for new beanie hats he is going to sell. He estimates that he can produce 20 000 hats a month with a selling price of £3.50. He expects the machinery costs to be £60 000 per annum, staff salaries are £72 000 per annum and raw materials cost £30 000 per month.
Calculate the margin of safety (4 marks)
(a)
Kiran is considering purchasing a van to help carry his equipment to his bookings. He is thinking of spending £10,000. He is expecting the van to be used for at least four years. The dealership has advised Sam that in four years’ time the van should have a resale value of £2000.
Calculate the depreciation of the van using the straight- line method. (3 marks)
(a)
Discuss the benefits and drawbacks of calculating the contribution per unit (6 marks)Tick which of these answers is correct?
Straightforward to calculate
Helps with calculation of break even level of output
Does not include fixed costs
Does not account for unexpected changes e.g. variable costs altering
Does not take into account that fixed costs like rent can alter
Kiran has a motor vehicle. The motor vehicle at cost was £18 000 and the depreciation for the motor vehicle was £11 000. The vehicle is depreciated by 15% using the reducing balance method.
Calculate the new net book value for the motor vehicle (3 marks)
(a)
State one advantage of using a break even chart (1 mark)
Is based on predicted costs and revenues
Can calculate the level of profit or loss at different levels
Ignores changes in variable costs
Does not take account of external factors
Chris has decided to invest in a tow truck to provide a call out service to customers. He feels that this will be a profitable investment and an opportunity for them to increase their profits. The truck will cost them £12,000 to buy second-hand and Chris estimates that there will be,
on average, £49 of labour and petrol costs required for each call out. He expects the customer call out charge to be £145.
Calculate how many ‘call outs’ would be required for Chris to break even on this investment.
(a)
(a)
When Andrew set up at the start of 2015, he purchased a van to enable him to collect stock and undertake any other business related activities. The van cost £22,000 and is expected to have a life span of 4 years. It is assumed the vehicle will have a scrap value of £2,000.
Using the straight-line method at 25% per year, calculate the net book value of the van for the
year ended 31 Dec 2015 (2 marks)
(a)
Average selling price per treatment £17
Break-even output per month 360
Variable cost per treatment £7
Average number of treatments sold per month 487
Using the data provided in the table above, calculate Chloe’s monthly fixed costs (2 marks)
(a)
