Worksheets5.5 IB Business - Break Even
Total questions: 10
Worksheet time: 5mins
Cycle4U is a bicycle shop in the town. The fixed cost of the company is $14 000 per month. The contribution per unit is $200. Using this information, if the target profit is $20 000, calculate how many bicycles the shop needs to sell.
70
100
170
200
Jan runs an ice cream shop. Jan needs to sell 10,000 units to break even. Jan sold 10,250 units this month. Calculate Jan’s margin of safety.
100
250
500
1,000
Leila runs an ice cream shop. Each unit of ice cream has a variable cost of $1.50 and sells for $2.00. Leila’s fixed cost for operating the shop is $5000 per month. How many ice creams does Leila need to sell to break even?
2,000
5,000
8,000
10,000
Ali runs an ice cream shop. Each unit of ice cream has a variable cost of $0.50 and sells for $2.00. Ali’s fixed cost for operating the shop is $5000 per month. What is the contribution per unit of ice cream?
$0.50
$1.50
$2.00
$2.50
The point where a business makes neither profit nor loss occurs when:
TR = TC
TR > TC
TC > TR
TR = TC or TR > TC
Which of the following terms indicates that total revenue is greater than total costs?
Profit
Loss
Break-even
Margin of safety
A firm has fixed costs of 10,000, total variable costs of 30,000, and sells each product for $2. Therefore, it needs to sell 20,000 products to break-even.
True
False
Which of the following is a limitation of using break-even analysis?
It can be used to evaluate company capacity.
It assumes that all customers pay the same price.
It allows companies to set sales targets.
It can be used to see how changes in costs may affect profit.
Key Term: the numerical difference between a firm’s volume of sales and its break-even quantity.
Break Even Quantity
Total Contribution
Margin of Safety
Target Profit
On a break-even chart, the total costs line slopes diagonally from left to right, beginning at the origin (zero).
True
False
