WorksheetsBreak Even Point
Total questions: 22
Worksheet time: 12mins
What factors do you need to consider when calculating the Break Even Point?
the fixed costs
sales revenue per unit
variable costs per unit
output activity
Daisy is an artist. It costs her $150 per week to operate her art studio. In this case, what is the $150?
the break-even point
the fixed cost
the variable cost
the sales revenue
Sophie creates handbags from her home studio (costing $600 per month to operate). Each bag requires materials that cost $40. Each bag takes two hours to make (at $15 per hour). The baskets are sold for $125 each.
What is the variable cost per unit?
$40
$30
$125
$600
$70
Sophie creates handbags from her home studio (costing $600 per month to operate). Each bag requires materials that cost $40. Each bag takes two hours to make (at $15 per hour). The baskets are sold for $125 each.
What is the sales revenue per unit?
$40
$30
$125
$600
$70
Sophie creates handbags from her home studio (costing $600 per month to operate). Each bag requires materials that cost $40. Each bag takes two hours to make (at $15 per hour). The baskets are sold for $125 each.
What is the fixed cost?
$40
$30
$125
$600
$70
Sophie creates handbags from her home studio (costing $600 per month to operate). Each bag requires materials that cost $40. Each bag takes two hours to make (at $15 per hour). The baskets are sold for $125 each.
How many baskets does Sophie need to sell per month to break even?
(a)
Which is the correct formula to calculate the Break Even Point?
fixed costs / (sales revenue per unit - variable costs per unit)
fixed cost per unit / (sales revenue - variable costs)
sales revenue / (fixed costs per unit + variable costs per unit)
fixed costs + sales revenue - variable costs per unit
fixed costs / (sales revenue per unit + variable costs per unit)
If the Break Even Point for a cake decorator is 14, what does that mean?
they need to make 14 cakes each month
they need to sell 14 cakes per month
they need to sell at least 15 cakes per month
the cakes need to be at least $14 each
the variable costs for each cake add to $14
When a business has made enough money to pay its costs and begin to make a profit, it has reached its
break even point
variable-cost margin
fixed cost
selling price
Fixed costs are called this 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
If Ben's Etsy store sales double, his variable costs will likely
remain the same
decrease
increase
double
A business that does not reach their break even point will
go bankrupt
have profit and loss
lose money
need to relocate
One main reason for calculating the break even point is to help the business to
determine stock value
prepare an income statement
forecast sales
set selling prices
Businesses calculate the break even point 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
Which one is not included in the Break Even formula?
variable costs per unit
total fixed costs
selling price per unit
cost price per unit
What does break even point show?
where a business is neither earning nor losing money
how many items they have to make
how much profit they're making
where a business has more fixed costs than variable
How is break even point measured?
dollars
loss
profit
items
What does a break even point of 54 units mean?
if they sell 55 units, they aren't making a profit
if they sell 54 units, they begin to make a profit
if they sell 55 units, they begin to make a profit
if they sell 54, they are at break even point
Which one is an example of a fixed cost?
resources
materials
temporary wages
rates
What are variable costs?
costs only related to making the product
overhead costs
combined costs
costs that include marketing
What is one limitation to calculating break even?
it helps projected sales
it is based on estimates
it is based on multiple products
it considers stock wastage
A break even graph includes total costs plotted alongside
total production
total revenue
total fixed costs
total units
