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WorksheetsBreakeven - Unit 3 - Business Finance
Total questions: 65
Worksheet time: 45mins
What are Fixed Costs?
the amount of money allocated for a business to use in certain departments
business costs, such as rent, that do not vary because of the amount of goods produced
costs that change depending upon the output
the point in a business when the profits are equal to costs
Which of the following calculations would you use to find total costs?
Fixed Costs + Variable Costs
Selling Price – Fixed Costs
Total Fixed Costs / Selling Price – Variable Cost
Total Fixed Costs/Variable Cost Per Item
If there was a rise in variable costs what effect would this have on the break even chart?
total cost line pivots downwards
fixed cost line and total cost line move upwards in a parallel shift
total cost line pivots upwards
revenue line pivots upwards
If there was a fall in fixed costs what impact would this have on the break-even output?
revenue would increase and tilt the SR line upwards
break-even is achieved at a lower level of output
greater output necessary to break-even
break-even is reached at a higher level of output
On a break-even chart, what line does the total revenue line meet at the break-even point?
The fixed cost line
The variable cost line
The total cost line
Semi variable cost line
If average variable cost is £10, and average selling price is £25, then what is contribution?
£35
£15
£-15
£40
If the average variable costs £10, average selling price is £25 and fixed costs are £60,000, then what is the break-even output?
5000
7000
6000
4000
What is a business doing when it sells output beyond the break-even point?
Making a loss
Making a profit
Making neither a profit or loss
It is not possible to tell from the graph
What is the break-even point in units for company where total fixed costs are £275,450
selling price per units £16
variable cost per unit is £14.75
220,360
183,633
150,300
225,120
What is the margin of safety?
The difference between units sold and the break-even amount
The margin between units and sales
The margin between each break-even point
The margin between profit and loss
The break even level of output for a firm is 800 units and it is currently making 950 units. What is its margin of safety?
150 units
250 units
300 units
1750 units
Two of these formulas are correct for working out the break-even point. Which two
Fixed Costs / Contribution Margin per unit
Total Costs - Fixed Costs x variable costs per unit
Fixed Costs / Sales price per unit - variable costs per unit
Contribution Margin per unit / Fixed Costs
What is an example of a fixed cost?
Rent
Overheads ( water, electricity)
Raw Materials
Wages
Which of the following is a limitation of break-even?
It helps projected sales
It is based on multiple products
It assumes all units produced are sold.
It considers stock wages
to draw a break-even graph what lines must you plot on the graph?
Total Costs
Variable Costs
Fixed Costs
Total Revenue
Anna runs a photography business. She has the following costs
Fixed costs = £30,000
Variable cost = £200 per photo shoot
Selling price: = £1000 per photo shoot
She predicts sales of 140 photo shoots for the year
What is the Total Contribution?
£112 000
£112 500
£375
£800
Simon has worked out the following figures for new Bobble 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.
What is the margin of safety?
66 000
74 000
200 000
174 000
We are going to manufacture Whats-Its. The Whats-It machine costs £4000.It also costs £5 for materials and labour for each Whats-It. We are planning to sell our Whats-Its for £12 each. How many Whats-Its must we sell in order to breakeven?
Make sure your breakeven figure is a round number.
571.42
572
570. 63
571
A business should know its breakeven point before it starts up. True or False
True
False
What is the amount at which the product is to be sold?
Cost Price
Selling Price
Net Sale
Profit
What is incurred in the creation of the product?
Selling Price
Fixed Cost
Variable Cost
Cost Price
Business experiences a __________ when the cost price is greater than the selling price.
Markdown
Break-even
Profit
Loss
Which is defined as the point when the total cost of a product is equal to the total income?
Profit
Loss
Mark-up
Break-even
What is the formula for contribution?
cost price - selling price
fixed costs - variable costs
selling price - variable cost
selling price - cost price
Simon has worked out the following figures for new Bobble 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.
What is the contribution margin per 20,000 hats?
66 000
74 000
200 000
40,000
The difference between the actual output and the breakeven level is known as the:
Buffer zone
Minimum cost line
Current ratio
Margin of safety
At any level of output below the breakeven point, a business will:
Make a profit
Make a loss
Increase selling price
Incur fixed costs
Which of these formulae defines the point at which breakeven occurs?
None of these
Total Revenue = Total Costs
Total Profit = Total Costs
Total Revenue = Total Price
Breakeven output can be calculated by dividing total fixed costs by:
Variable cost per unit sold
Selling price per unit sold
Contribution per unit sold
Total variable costs
A limitation of the usefulness of breakeven analysis is that:
Variable costs may fall over time
Most business people don't understand it
Revenues are impossible to forecast
Not all output will be sold
A benefit of using breakeven analysis is that a firm can:
Analyse future cash flows
Assess the effect of changes in selling price on profit
Avoid any fixed costs
Guarantee to earn a profit
If the margin of safety is 7,500 units and breakeven output is 12,200 units, what is actual output?
4,700 units
19,700 units
$19,700
$4,700
An option for a firm looking to reduce its breakeven point is to:
Reduce its selling price
Undertake an advertising campaign
Give the staff a pay rise
Buy cheaper raw materials
A baker's fixed costs are $10,000, sells cakes at SP of $45 and the VC per cake is $25. What is the breakeven level of production?
500 units
20 units
50 units
5,000 units
Other things remaining the same, an increase in fixed costs will:
Increase the breakeven output
Reduce unit costs
Decrease the breakeven output
Increase contribution
On a break even chart, which line is horizontol?
Total Revenue
Fixed Costs
Total Costs
Variable Costs
On a break even chart, which line starts at fixed costs?
Total Revenue
Fixed Costs
Total Costs
Variable Costs
Break Even is measured in
Output
£
What appears on the x axis on a Break Even Chart?
Revenue
Total Costs
Output/Number of units
Sales Revenue
What is the margin of safety?
The difference between your chosen output and the break even point
The difference between sales and output
The difference between profit and loss
The difference between Total Revenue and Total Profit
On this chart at which point does this business break even?
190
200
$2,000
$1,000
Using this diagram what line is G?
Total Revenue
Variable Costs
Total Costs
Fixed Costs
Using this diagram what line is F?
Total Revenue
Variable Costs
Total Costs
Fixed Costs
If fixed costs are 100, selling price is 10 and the variable costs are 5. What is break-even?
25
20
10
35
If fixed costs are 500, selling price is 15 and the variable costs are 5. What is break-even?
50
20
60
35
What is the break-even point in units for company where total fixed costs are £275,450
selling price per units £16
variable cost per unit is £14.75
220,360
183,633
150,300
225,120
Identify Point 1 (the y axis label)
Revenue/Costs
Profit
Output
Sales Revenue
Identify Point 2 (the x axis label)
Revenue/Costs
Profit
Output
Sales Revenue
Label Point 3 (orange line)
Fixed Cost
Total Cost
Profit
Sales Revenue
Label Point 4 (pink)
Fixed Cost
Total Cost
Profit
Sales Revenue
Label Point 5 (green)
Fixed Cost
Total Cost
Variable Cost
Output
Label Point 6 (red line)
Fixed Cost
Total Cost
Variable Cost
Output
Label Point 7
Break Even Point
Profit
Margin of Safety
Output
Label Point 8
Break Even Point
Profit
Margin of Safety
Loss
Label Point 8
Break Even Point
Profit
Margin of Safety
Loss
According to the following data (Selling Price= $1000, Variable Cost= $268, Fixed Cost= $12.000) Calculate the breakeven ***3 minutes to answer***
16.39
16.93
19.36
13.69
According to the following data (Selling Price= $350, Variable Cost= $81, Fixed Cost= $3.900) Calculate the breakeven ***3 minutes to answer***
14.41
14.59
14.49
14.94
According to the following data (Selling Price= $12.500, Variable Cost= $9.000, Fixed Cost= $44.000) Calculate the breakeven ***3 minutes to answer***
12.55
12.56
12.58
12.57
According to the following data (Selling Price= $700, Variable Cost= $123, Fixed Cost= $7.000) Calculate the breakeven ***3 minutes to answer***
12.08
12.13
12.09
12.12
According to the following data (Selling Price= $450, Variable Cost= $150, Fixed Cost= $53.000) Calculate the breakeven ***3 minutes to answer***
176.66
176.67
167.66
167.76
What are Fixed Costs?
the amount of money allocated for a business to use in certain departments
business costs, such as rent, that are constant whatever the amount of goods produced
costs that change depending upon the output
the point in a business when the profits are equal to costs
On a break-even chart, what line does the total revenue line meet at the break-even point?
The fixed cost line
The variable cost line
The total cost line
