WorksheetsBreak-even Topic 5.4
Total questions: 20
Worksheet time: 25mins
What is meant by the term "break-even"?
The amount a business must pay in costs is greater than the amount it must sell to earn revenue.
It is where the profit made is greater than the loss as revenue is greater than total costs.
The amount a business must sell to earn enough revenue to just cover its costs so it does not make a profit or a loss.
It is where the profit made is less than loss as revenue is less than total costs.
What is "break-even quantity"?
The output at which revenue is greater than costs.
The output at which revenue is equal to costs.
The output at which revenue is less than costs.
The output at which costs is greater than revenue.
What is the break-even output formula?
Fixed costs / Contribution per unit
Fixed costs / Selling price per unit
Contribution per unit/ / Fixed costs
Fixed costs / Variable costs per unit
What is meant by contribution per unit?
Fixed costs - selling price per unit
Variable costs - Selling price per unit
Selling price per unit - Fixed costs
Selling price - Variable costs per unit
What is the break-even output if fixed costs are £30,000, selling price per unit is £20 and variable costs per unit are £8?
£2,500
2,500
£1,500
£3,750
What is the break-even output if the amount charged to customers is £60, the cost of making each item is £25 and fixed costs are £700,000?
£20,000
£2,000
20,000
2,000
How would you determine the break-even point on a graph?
Where the lines for total revenue and total costs cross
Where the lines for total revenue and fixed costs cross
Where the lines for total costs and fixed costs cross
Where the lines for fixed costs and variable costs cres..
What is the formula for calculating profit using the break-even concept?
Total contribution - Selling price
Fixed costs - Total contribution
Fixed costs / Total contribution
Total contribution - Fixed costs
What is meant by "total contribution"?
Contribution per unit / quantity
Quantity - Contribution per unit
Contribution per unit x quantity
Quantity / Contribution per unit
What is the profit (or loss) if 10 units were sold at a selling price of £85, the variable costs per unit was £25 and fixed costs were £300?
300
(£300)
£300
£600
What is meant by "break-even forecast"?
A statement about the break-even quantity, based on the actual figures for revenues and costs.
A prediction about the break-even quantity, based on estimates of future sales revenues and costs.
A prediction about the break-even quantity, based on past figures for sales revenues and costs.
A statement about the break-even quantity, based on past figures for sales revenues and costs.
What is meant by the term "margin of safety"?
The amount by which the actual output of a business is greater than its break-even output.
The amount of safety involved in producing enough sales revenue to cover total costs
The amount by which the break-even quantity of a business is greater than its actual output.
The amount of sales needed to cover all the costs of the business.
What is the margin of safety if the break-even output (sales) is 250 and the actual sales is 600?
600
450
350
250
When would it be useful for a business to calculate the break-even output?
If it needed a loan.
To determine whether profit would be made at different sales levels.
.To determine the level of competition.
If the business was planning a change in tis selling price.
To determine how much the business had to sell to break-even.
What are the limitations to break-even analysis?
Business decisions are made using current and actual figures for selling price and costs, which would help with changing the level of output and sales.
The number of competitors in the market may change, so sales may not be as predicted.
Variable costs may change, due to changes in the cost prices, so total costs would not be as predicted.
If a promotional offer is made, then the selling price would be less than the figure used to calculate the break-even output.
An increase in selling price may not lead to an increase in revenue.
Break-even forecasts are useful (a) for business.
Break-even forecasts can be used to plan how much to produce and sell and what the (a) will be.
Break-even forecasts are (a) based on certain assumptions, and there is no guarantee that they will be accurate.
What is the total variable cost of producing 10,000 booklets if the selling price is £5, the variable cost per booklet is £2 and fixed costs are £30,000?
£30,000
£20,000
£15,000
£10,000
What is the break-even output if the variable cost per booklet is £2, the fixed costs are £30,000 and selling price is £5?
5,000
10,000
15,000
20,000
