WorksheetsBreak-even in-class practice
Total questions: 13
Worksheet time: 10mins
Which of the following is the correct formula for calculating contribution per unit?
Price per unit + variable cost per unit
Total revenue – total cost
Price per unit – variable cost per unit
Total revenue – total variable cost
The point at which the level of sales of a business exactly equals its costs is known as the...
Start-up stage
Break-even point
Insolvency point
Profit point
Mr Icy is a popular shop in a busy town, selling tubs of frozen yoghurt. Each tub has a variable cost of $0.25 and sells for $1.50. Mr Icy’s fixed costs of operating the shop are $10,000 per month. What is the contribution per tub of frozen yoghurt?
$1.75
$0.75
$1.25
$1.00
Mr Icy is a popular shop in a busy city, selling tubs of frozen yoghurt. Each tub has a variable cost of $0.25 and sells for $1.50. Mr Icy’s fixed costs of operating the shop are $10,000 per month. How many tubs of frozen yoghurt must Mr Icy sell each month in order to break-even?
12,333
4,333
6,000
8,000
Mr Icy is a popular shop in a small town, selling tubs of frozen yoghurt. Mr Icy needs to sell 8,000 tubs of frozen yoghurt each month to break-even. Last month Mr Icy sold 9,500 tubs. Using this information, calculate Mr Icy’s margin of safety.
8,000
-1,500
1,500
9,000
The difference between actual sales and the number of units needed to break- even is known as the...
Margin of safety
Standard cost
Margin of error
Opportunity cost
On a break-even chart, what does the horizontal axis measure?
Opportunity cost
Output or units of production
Cost and revenues
Profit or loss
Boards R Us is a surfboard shop in a famous beachside town. Each surfboard has a variable cost of $420 and sells for $500. The fixed costs for Boards R Us are $12,000 per month. Using this information, how many surfboards must Boards R Us sell each month in order to break-even?
80
200
149
150
Boards R Us is a surfboard shop in a famous beachside town. The fixed costs for Boards R Us are $12,000 per month, and the contribution per surfboard is $80. Using this information, if the target profit is $20,000 how many surfboards must Boards R Us sell each month?
440
220
180
400
Which of the following is a limitation of break-even analysis?
It provides a visual means of analysing a firm’s financial position at various levels of output
It can be used to gauge the level of risk in a particular project
It can be used as a strategic decision-making tool
It does not allow for possible changes in costs over time
Which of the following is a not a limitation of break-even analysis?
It assumes that only one product is produced by a business
It assumes that a business will sell all of its output
It assumes that costs are linear so ignores economies of scale
It is relatively simple to calculate and analyse
Which of the following is the formula for calculating target profit output?
Target profit divided by contribution per unit
Fixed costs divided by contribution per unit
(Variable costs + target profit) divided by contribution per unit
(Fixed costs + target profit) divided by contribution per unit
On a break-even chart, what are fixed costs represented by?
A line beginning from the origin (zero)
The point where the total cost line intersects with the total revenue line
A line parallel to the variable cost line
A continuous horizontal line
