Free Printable 4.2 Costs and Break-even analysis (IG)

Worksheets

4.2 Costs and Break-even analysis (IG)

Total questions: 24

Worksheet time: 27mins

Name

Class

Date

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

What is the margin of safety?

the margin between projected units and break even point units

the margin between profit and loss

the margin between units and sales

the margin between each break even point

What is the formula for contribution?

cost price - selling price

fixed costs - variable costs

selling price - variable cost

selling price - cost price

What is one limitation to calculating break even?

helps projected sales

based on estimates

based on multiple products

considers stock wastage

To draw the BE graph you must plot Total Costs and ........

Total Production

Total Revenue

Total Fixed Costs

Total Units

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

If a business's sales double, its variable costs will also likely

remain the same

decrease

increase

double

One of the main purposes for calculating break-even is to help the business to

determine stock value

prepare an income statement

forecast sales

set selling prices

10.

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

11.

Bart is planning on opening an ice cream parlour. After carrying out some research a friend has presented him with a break-even chart but he is unsure of what it means.

He has asked you to show him where the break-even point is.

12.

Bart should break-even at 600 ice creams per month. He believes that he can sell 850 ice creams per month. What is his margin of safety?

250

1450

150

13.

The total costs are calculated as the sum of the (a) costs and the variable costs.

14.

(a) costs don't vary as the business changes its output

15.

(a) costs change directly with output.

16.

Fixed or Variable?

Raw materials

Fixed

Variable

17.

Fixed or Variable?

Office rent

Fixed

Variable

18.

Fixed or Variable?

Insurance

Fixed

Variable

19.

Fixed or Variable?

Salaries

Fixed

Variable

20.

Diseconomies of Scale result in a lower per unit production cost over the long run

True

False

21.

Internal diseconomies of scale can be caused by

Being unable to purchase stocks at a discounted price

Poor management being unable to effectively control a large workforce

Traffic congestion causing delays to delivery of important stocks

Advertising costs to a global audience

22.

Machinery is likely to be efficient. what economies it indicate?

Financial Economies

Buying Economies

Technical Economies

Managerial Economies

23.

Employing specialist cost accountant in a growing business is an example of which type of internal economies of scale?

technical economies of scale

risk bearing economies of scale

Managerial economies of scale

marketing economies of scale

24.

What are diseconomies of scale?

size of a business

falling average costs due to expansion

rising average costs when a firm becomes too big

cost benefits that all firms in an industry can enjoy when the industry expands

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4.2 Costs and Break-even analysis (IG)

Total questions: 24

Worksheet time: 27mins

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