WorksheetsAS Business Break Even and Costing Revision Questions
Total questions: 50
Worksheet time: 55mins
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 losing money
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
Tony pays $120 daily for rent in his BBQ stand. Each stick costs him $4 and sells it for $8. How many sticks of BBQ should he sell everyday to reach break even point?
30
120
4
240
Rent is an example of a fixed cost.
TRUE
FALSE
Variable costs are affected by the number of items sold.
TRUE
FALSE
What is the formula for contribution?
cost price - selling price
fixed costs - variable costs
selling price - variable cost
selling price - cost price
Fixed costs: = £30,000
Variable cost: = £200 per photo shoot
Forecast output (Sales): = 140 photo shoots
Selling price: = £1000 per photo shoot
What is the Total Contribution?
£112 000
£112 500
£375
£800
Simon has worked out the following figures for new Bobble Hats he is going to sell. He estimates that he can produce 20 000 hats a month with a selling price of £3.50. He expects the machinery costs to be £60 000 per annum, staff salaries are £72 000 per annum and raw materials cost £30 000 per month.
What is the margin of safety?
66 000
74 000
200 000
174 000
Which one of the following would be included in the calculation of total costs?
Selling price
Rent of premises
Revenue
Refund to a customer
Gemima sells dolls houses at £50 each. Each dolls house costs her £32 to make. Her fixed costs are £2700. How many dolls houses must Gemima make in order to break-even?
Break-even = fixed cost
Selling price per unit - variable cost per unit
150
22
19
20
Gemima's dolls houses are very popular, she is considering setting her selling price to £55. If she does this what would happen to her break-even point?
Would increase
Would decrease
Would stay the same
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.
1
2
3
4
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
50
Frederick is revising his formulae for a test on break-even. He has mixed up his revision notes. What is the formulas for Profit
Total revenue - total cost
Fixed cost + variable cost
Actual output - break-even point
Total revenue = total cost
Which of the following is not a direct cost of production for a car manufacturer?
Raw materials
Wages of production workers
Factory rental cost
Depreciation
Which is the following is a direct cost to a computer retailer
Marketing cost
After-sales care
Rental cost
Depreciation of delivery vehicle
Contribution per unit is calculated by ______ price minus the ____ variable cost.
Average, total
Total, average
Selling, Average
Total , Total
Total contribution is difference between
Total revenue and total variable costs
Total revenue and total costs
Price and total costs
Price and variable costs
Which of the following is a strength break-even analysis?
It assumes that all output is sold.
It accounts for variances in actual sales and planned output
It assumes that all output is sold at one price
It accounts for both fixed and variable cost
A premium hotel can raise its revenue in a number of ways, except for:
Reducing fixed cost
Reducing its prices
Reducing labor costs
Raising prices during peak periods
What can be worked out from calculating the price of a product and its variable cost?
Total contribution
Unit contribution
Break-even point
Profit per unit
A firm sales revenue of $5 million from sales volume of 4000 units. Its average cost are $600. Fixed cost are $1 million. What is the total contribution for the firm.
$1.6 million
$2.4 million
$2.6 million
$3.6 million
Which of the following cost will continually decline for taxi driver as the mileage covered increases?
Total variable costs
Total fixed costs
Average variable costs
Average fixed cost
Any output sold _____________ the break-even point will generate a __________ for the business
Near , Loss
Above , Profit
Above , Loss
Below , Profit
If a business raises its price, which of the following is most likely to occur?
Break-even output will fall
Break-even output will rise
Profit will fall
Profit will increase
Which of the following statements applies to the margin of safety?
it can be increased if a firm becomes more liquid
The firm produces at break-even level of output so it is financially safe
The firm operates at a level higher than its break-even
The firm makes neither a profit nor a loss
Parc Oasis Ltd. has fixed cost of $15,000 per month, with unit variable cost of $200 and a selling price of $500 per unit.
What is the total cost of production to Parc Oasis Ltd. if it produces 100 units each month.
$15,000
$15,700
$35,000
$65,000
Parc Oasis Ltd. has fixed cost of $15,000 per month, with unit variable cost of $200 and a selling price of $500 per unit.
What is Parc Oasis Ltd. break-even level of output per month?
21
30
50
75
The level of output at which total costs equal total revenue
Total Revenue
Total Cost
Break-even point of production
Selling price
The amount be which sales level exceeds the break-even level of output
Total cost
Total profit
break-even
Margin of safety
The amount of revenue needed to cover both fixed and variable costs so that the business breaks even (Break-even quantity x Price)
Break-even revenue
Loss
Total cost
Total variable cost
Price - AVC
Total Cost
Total Revenue
unit contribution
profit
The level of output needed to be produced and sold at a particular price to make the particular amount of profit a firm is seeking.
Margin of Safety
Selling prive
Target profit output
Fixed cost
The concept of break-even analysis can help in the following business decisions, except for
Special order decisions
Make-or-buy decision
Payback period (investment appraisal)
Qualitative decision-making
Which of the following is not a criticism of using break-even analysis?
Cost are unlikely to be linear in reality
Unit cost are unlikely to remain constant all levels of output
Prices are unlikely to be constant across all levels of sales
Multi-product firms cannot use break-even analysis.
